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Hyundai files DRHP for IPO, expected to raise record $3B

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In Short:

Hyundai Motor India has filed a draft red herring prospectus with SEBI to sell 142.2 million shares at a face value of ₹10 each. The IPO is expected to raise at least $3 billion. This will be India’s largest IPO, surpassing LIC’s share sale. Hyundai is the third largest revenue generator for Hyundai Motor Corporation and currently pays a 3.5% royalty to HMC for each vehicle sold in India. The IPO will allow Hyundai to expand in the growing Indian automotive market.

Hyundai Motor India Files Draft Red Herring Prospectus for IPO

Exciting news alert! The Indian arm of South Korean auto giant Hyundai Motor India (HMIL) has submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI). In this move, the company plans to offer around 142.2 million shares (out of a total of 812 million shares) at a face value of ₹10 each.

Biggest IPO in India Expected

Although specifics like the pricing of the initial public offering (IPO) or the company’s valuation were not provided in the initial papers, sources indicate that Hyundai aims to raise a whopping $3 billion (approximately ₹25,000 crore) through this IPO. If successful, it will go down in history as the largest IPO in India, surpassing LIC’s share sale of ₹21,000 crore.

Key Players in the Share Sale

The advisors for this much-anticipated share sale include big names like Citigroup, Kotak Mahindra Bank, JP Morgan, HSBC, and Morgan Stanley.

Hyundai’s Commitment to Indian Market

India holds the third position in revenue generation for Hyundai Motor Corporation (HMC). In the previous financial year, Hyundai sold a total of 7,77,876 units (including exports), marking an impressive eight per cent growth from the previous fiscal year.

  • Also read: Maruti, Hyundai, Tata see marginal growth in May sales

Control and Royalty Agreement Details

In the DRHP, HMIL disclosed that the IPO offer will constitute 17.50% of the post-offer paid-up equity share capital of the company. The document also highlighted that HMIL’s promoter, HMC, currently holds 100% of the issued, subscribed, and paid-up equity share capital. Post the IPO, HMC will hold approximately 82.50% of the equity share capital.

Moreover, HMIL mentioned a royalty agreement with HMC, where 3.5% of revenue will be paid as royalty for each vehicle model sold.

Analysts’ Take on the IPO

Industry analysts believe that Hyundai’s decision to go public in India is a strategic move to tap into the country’s growing market potential. It also signifies global automobile manufacturers’ belief in the Indian automotive market.

According to Gaurav Vangaal, Associate Director at S&P Global Mobility, this step by Hyundai showcases the confidence of global carmakers in the Indian automotive and capital markets, paving the way for increased investments in the country.

Hyundai’s Continued Presence in India

The visit of Hyundai’s Executive Chair Euisun Chung and CEO Chang Jae-Hoon to India in April, along with the company’s operations in India since 1996, demonstrate their long-standing commitment to the Indian market. Hyundai currently has manufacturing facilities in Tamil Nadu and an upcoming plant in Talegaon, Maharashtra.

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