India's biggest IPO? Hyundai also picks Kotak, MS to finalize syndicate; eyes $2.5 bn to $3 bn raise

Depending on final valuations and extent of stake dilution, this could potentially rank as India's biggest ever IPO at the higher end of the range with the auto major planning to raise between $2.5 billion to $3 billion via the issue.

South Korean auto giant Hyundai Motor Co has also picked investment banks Kotak Mahindra Capital and Morgan Stanley as it finalizes its syndicate of advisors for the mega listing of its arm Hyundai Motor India Limited on the domestic bourses, four persons in the know told Moneycontrol.

Citi, JP Morgan and HSBC Securities had been engaged previously for the high-profile deal, Moneycontrol had reported on February 9.

Depending on final valuations and extent of stake dilution, this could potentially rank as India's biggest ever IPO at the higher end of the range with the auto major planning to raise between $2.5 billion to $3 billion via the issue.

The current record is held by state-owned LIC which raised $2.7 billion in May 2022.

"Kotak Mahindra Capital and Morgan Stanley have come on board recently and joined the rest. The target is to file the DRHP (draft red herring prospectus) with Sebi by end June or by July. A successful listing will nudge many other top MNCs to follow suit," said one of the persons above.

A second person confirmed the above and said that the targeted ballpark valuation was around $20 billion for the Indian arm, but was quick to add that "There are lots of moving parts and these are early days. The valuation and IPO size haven't been finalized and depending on the company strategy and market conditions, both may vary at a later stage. More clarity can be expected closer to the filing of draft papers."

Previous media reports have pegged the local unit's valuation between $22 billion to $30 billion.

Hyundai Motor India Limited was India's second largest carmaker after Maruti Suzuki in FY24 in terms of passenger sales volumes.

A third person told Moneycontrol that the issue was likely to be purely an OFS (offer for sale) by the parent.

"The OFS figure as part of discussions currently is 15 percent but that hasn't been frozen yet," this person said.

A fourth person also confirmed the i-bank additions to the IPO syndicate.

"Multiples are very high here and value unlocking of the Indian unit is a key trigger for the proposed listing. The Korean government has also been encouraging large conglomerates to monetize their investments globally," this person elaborated.

Incidentally, Hyundai Motor India ended FY23 with revenue of Rs 60,000 crore and profits of Rs 4,653 crore, the highest amongst the non-listed car manufacturers in the country, according to Autocar Professional.

All the four persons above spoke to Moneycontrol on the condition of anonymity.

Multiple emails sent to the media team of Hyundai headquarters were left unanswered at the time of publishing this article.

Kotak Mahindra Capital and Morgan Stanley couldn't be reached for an immediate comment. This article will be updated as soon as we hear from all the parties.

The Economic Times was the first to report the India listing plans of Hyundai on February 5. Responding to media reports, Hyundai Motor Co issued an official statement to the Korean Stock Exchange on February 7. Hyundai said that as a global company, it is constantly reviewing various activities, including listing overseas subsidiaries, to increase corporate value, but nothing has been confirmed to date.

India is a significant market that accounted for around 13 percent of Hyundai’s global sales in 2023. i20, Verna, Creta, Aura and Tucson are some of the firm's car models in the Indian market.

The India unit clocked the highest-ever domestic sales in 2023, crossing the six-lakh mark. It sold 6,02,111 units, a nine percent increase over the previous year's 5,52,511 units. On the export front, the performance rose by 10 percent, as it shipped 1,63,675 units compared to 1,48,300 units on a year-on-year basis.

Hyundai plans to launch its first locally produced electric vehicle (EV) in India in 2025.

“Starting with the mass production of its first electric SUV model at the Chennai plant at the end of 2024, the company plans to further produce five EV models by 2030. Hyundai Motor India will also utilize its sales network hubs, expanding the number of EV charging stations to 485 by 2030,” the firm said in a statement last month.

Hyundai Motor Group's Executive Chair Euisun Chung made a visit to India last month to review the firm's mid to long -term mobility strategies.