BlackRock, Fidelity snap up Hyundai India shares in record US$3.3bil IPO
SYDNEY: Hyundai Motor India sold shares worth US$989.4 million to institutional investors including BlackRock and Fidelity on Monday, as the carmaker launched a US$3.3 billion IPO that will be the country’s largest share offering yet.
The Government of Singapore and BlackRock together picked up stakes worth a total of US$77.3 million, while Fidelity bought shares worth US$76.5 million. Domestic mutual funds were allocated shares worth a total US$340 million.
The IPO shows continued enthusiasm for India’s capital markets, with 260 companies having raised more than US$9 billion so far in 2024, according to LSEG data. The year-to-date volume has already surpassed the US$7.42 billion total raised last year.
Hyundai will not issue new shares in the IPO, in which its South Korean parent will sell up to 17.5% of its stake in the wholly-owned unit that will be valued at up to US$19 billion.
At that size, Hyundai India will make up about 40% of its parent company Hyundai Motor’s market capitalisation.
According to official filings, 142,194,700 shares are on offer in a price band of 1,865 to 1,960 rupees, and the deal is the first time Hyundai is listed outside of its South Korean home market.
Retail and other investors can place orders from Tuesday to Thursday following on from Monday’s buying by the anchor investors – large institutions that usually buy shares at the upper end of the price band and are subject to a lock-in period when they cannot sell shares.
The stock will begin trading in Mumbai on Oct 22.
Hyundai India’s IPO is set to eclipse the country’s previous record of Life Insurance Corporation of India’s 2022 deal when it raised US$2.5 billion.
Globally, it will be the second largest IPO this year in terms of money raised, following Lineage Inc’s US$5.1 billion US IPO in July.
Consumer preferences
With its SUV-focused portfolio, the company is seeking to capitalise on consumer preferences for bigger vehicles and safety, analysts at IDBI Capital said, adding this should help Hyundai India gain market share and grow ahead of the industry.
Analysts said anchor investors had the prospect of long-term value as Hyundai Motor expands and strengthens its position in Indian market.
“The company’s plans for a 250,000 vehicle expansion by December 2025 show that there is apparent money in the long term for anchor investors. This, along with prospective market share improvement provides a runway of growth for the company,” said Arun Kejriwal, founder of Kejriwal Research.
Shin Yoon-chul, an analyst at Kiwoom Securities, said the IPO was timely as the auto sector has been leading performance on the Indian stock market.
The analyst said funds raised by the IPO could help the company “secure a sizable investment capacity” and close the market share gap with India’s biggest market player Maruti Suzuki.
Apart from increasing its SUV range, Hyundai Motor, India’s second biggest player, plans to launch its first India-made electric vehicle early next year and introduce at least two gasoline-powered models tailored to the market starting in 2026.
