The brand of Hyundai Motor India is seen outdoors a automotive showroom, in Ahmedabad, India, Oct. 7. Reuters-Yonhap
Hyundai Motor plans to make use of proceeds from a file $3.3 billion IPO of its Indian unit to boost its analysis efforts and develop new vehicles, aspiring to rework the South Asian nation into a producing hub for rising markets.
Hyundai is because of launch its preliminary public providing — India’s greatest ever — subsequent week. It’ll set a price of as much as $19 billion for its enterprise in India, the world’s third-biggest automotive market, the place Hyundai competes with market chief Maruti Suzuki and rivals corresponding to Tata Motors.
Kim Un-soo, managing director of Hyundai’s Indian unit, stated the IPO proceeds can be used to “make investments aggressively in new merchandise, future know-how and analysis and growth capabilities of the India unit.”
Hyundai’s Korean mum or dad will offload a stake of as much as 17.5 p.c within the Indian unit, gaining its first inventory market itemizing outdoors its house nation and changing into the primary automaker to go public in India since Maruti Suzuki in 2003.
“India is without doubt one of the most enjoyable auto markets on the earth … (The) IPO will be sure that Hyundai Motor India is much more devoted to reach India,” Kim advised a press briefing in Mumbai on Wednesday.
The IPO, the world’s second-biggest in 2024, comes simply as Indian inventory markets scaled file highs however when the nation’s automotive gross sales progress has been slowing.
Whereas gross sales of newly launched SUVs are regular, these of hatchbacks and small vehicles — which make up roughly 30 p.c of annual automotive gross sales — are slowing as inflationary pressures in latest months have squeezed mid-income patrons.
Hyundai is India’s second-largest carmaker by gross sales, with about 15 p.c share of the nation’s passenger automobile market and trails solely Maruti Suzuki however a quickly altering aggressive panorama has seen home rivals Tata and Mahindra & Mahindra eat into the Korean firm’s market share with new SUVs which are gaining reputation.
This photograph, supplied by Hyundai Motor Group, reveals Hyundai Government Chair Chung Euisun, middle, on the Hyundai Motor Kia India Know-how Analysis Heart in Hyderabad, India, Aug. 8, 2023. Newsis
Hub for rising markets
With a contribution of 15 p.c to gross sales, India is the third-biggest income generator for Hyundai after the U.S. and Korea. It has invested $5 billion within the nation and plans to pump in one other $4 billion over the following decade.
Hyundai entered India 28 years in the past with its tall-boy design small automotive known as Santro which made it a family title. The carmaker quickly plans to launch new electrical autos, set up charging stations and introduce hybrid vehicles in India beginning in 2027.
The IPO, to be priced within the vary of 1,865 to 1960 rupees, opens on Monday for giant institutional buyers, and on Oct. 15-17 for retail and different classes. The inventory is ready to begin buying and selling in Mumbai on Oct. 22.
On the higher finish of that worth vary, the share sale values Hyundai India at round $19 billion, making up about 40 p.c the mum or dad’s $45 billion valuation on Seoul’s KOSPI index. By comparability, Maruti Suzuki’s market capitalization in India is $48 billion.
Hyundai at present has one manufacturing unit within the nation for native gross sales and exports, with a second plant anticipated to start manufacturing in 2025 and which is able to take its complete manufacturing capability in India to past 1 million items a yr.
The Hyundai India IPO is being executed through an offer-for-sale route the place no new funds are raised and solely the mum or dad entity will promote its stake.
Tarun Garg, chief working officer of Hyundai India, advised Reuters in an interview the Indian unit’s income are at present sufficient to maintain capital expenditure wants.
“We intend to turn into a world manufacturing hub for Hyundai for the rising markets … In subsequent 3-4 years, 30 p.c improve in manufacturing will enhance our home and export volumes,” he stated on the press briefing. (Reuters)
