Hyundai Motor Company’s IPO: A Commitment to India’s Automotive Future
In a significant move that underscores its commitment to the Indian market, Hyundai Motor Company (HMC) has launched the initial public offering (IPO) of its Indian subsidiary, Hyundai Motor India Ltd (HMIL). This strategic decision was highlighted by HMC’s Executive Chair, Euisun Chung, during the listing ceremony held recently. The IPO not only marks a pivotal moment for HMIL but also reinforces the company’s long-term vision for growth and innovation in India.
A Muted Market Debut
Despite the high expectations surrounding the IPO, shares of Hyundai Motor India Ltd experienced a muted debut, falling nearly 6% from the issue price of Rs 1,960. The IPO, which raised an impressive Rs 27,870 crore, was priced within a band of Rs 1,865 to Rs 1,960 per share. It garnered a subscription rate of 2.37 times on the final day of bidding, primarily driven by institutional investors. This IPO stands out as the largest in India, surpassing the previous record set by the Life Insurance Corporation (LIC) with its Rs 21,000 crore share sale.
The Structure of the IPO
The IPO was structured entirely as an Offer For Sale (OFS), involving the sale of 14,21,94,700 equity shares by HMC, with no fresh issue component. This dilution of 17.5% in HMIL’s stake reflects HMC’s strategy to enhance its presence in the Indian market while providing an opportunity for investors to participate in the growth story of one of the fastest-growing auto manufacturers in the country.
Hyundai’s Journey in India
Hyundai’s journey in India began in 1996 with the launch of the Santro model in 1998. Since then, the company has expanded its portfolio to include 13 models across various segments, establishing itself as a key player in the Indian automotive landscape. Chung emphasized that the IPO signifies HMIL’s integral role in India, stating, “It demonstrates our commitment to this great nation and ensures that our shareholders and HMIL will continue to grow together.”
A Vision for the Future
Chung’s remarks at the listing ceremony highlighted Hyundai’s foresight in recognizing India as a vital market for the future. The company has consistently increased its investments and expanded its research and development capabilities in the country. As India progresses towards its Viksit Bharat vision, Hyundai aims to be a trusted partner in this journey, further solidifying its commitment to the Indian market.
Hyundai Motor India Managing Director Unsoo Kim echoed this sentiment, stating that the IPO is just the beginning of a broader strategy to “Indianize” operations. He expressed confidence in the company’s ability to satisfy customers while upholding shareholder value and contributing to India’s sustainable growth through continued investments.
Financial Commitments and Future Plans
Hyundai’s financial strategy includes a royalty payment of 3.5% of passenger car revenue to HMC, which aligns with industry standards for technology and brand utilization. HMIL Chief Operating Officer Tarun Garg reassured stakeholders that this arrangement will remain unchanged post-IPO. He also expressed optimism about the Indian automotive market, noting that demand has historically rebounded quickly, even after periods of slowdown.
According to VAAHN data, vehicle registrations in India have surged by 25-30% sequentially in October, indicating a robust recovery in demand. To capitalize on this growth, HMIL has laid out an ambitious capital expenditure plan of Rs 32,000 crore to be invested by 2032. This investment will focus on capacity expansion and the development of a strong electric vehicle (EV) localization ecosystem, positioning Hyundai as a leader in the future of mobility.
Conclusion
Hyundai Motor Company’s IPO of its Indian arm is a landmark event that not only reflects the company’s commitment to India but also its strategic vision for the future. As HMIL continues to innovate and expand, it stands poised to play a crucial role in shaping the Indian automotive landscape. With a robust plan for growth and a dedication to sustainability, Hyundai is set to remain a key player in India’s journey towards becoming a global automotive hub.