Hyundai India to raise up to Rs 25,000 crore via IPO

Hundai India IPO: Hyundai Motor Company of South Korea plans to sell up to 17.5 per cent of its stake in Hyundai Motor India Ltd through an initial public offering (IPO), potentially raising as much as around Rs 25,000 crore ($3 billion), three sources familiar with the matter told Reuters. The IPO could become the largest ever in India.

Hyundai is expected to submit the necessary documents for the listing to the stock market regulator by Friday, the sources indicated. Upon receiving regulatory approval, the company will list on the Mumbai stock exchange.

Hyundai Motor India Ltd, which is the second-largest carmaker in India after Maruti Suzuki will not issue new shares. Instead, the IPO will feature the South Korean parent company selling part of its existing stake in the wholly-owned unit through an "offer for sale" mechanism, the sources explained.

While Hyundai Motor India did not provide a comment, the sources confirmed that this will be Hyundai's first listing outside of South Korea. The company aims to raise between $2.5 billion and $3 billion from the stake sale.

Although Hyundai is seeking approval to sell up to a 17.5 per cent stake, the actual percentage sold may be lower, according to the sources. Previously, sources have valued Hyundai's India unit at up to $30 billion.

The IPO is part of Hyundai's strategy to boost its expansion in India, where it has been operating for over 25 years and where its models like the Santro and Creta SUV are popular. The listing will reduce Hyundai Motor India's reliance on its Korean parent for funding, providing it with the financial strength to compete with local rivals like Tata Motors and pursue independent growth plans in a market that represents 14 per cent of Hyundai's total global sales.

Hyundai has future plans to sell domestically manufactured electric vehicles, establish a charging network, build a battery facility, and expand its manufacturing capacity in the country, as reported by Reuters.

In its filing with the Securities and Exchange Board of India (SEBI), Hyundai will list "risk factors" for investors, which include its dependency on the Korean parent and related party transactions within the Hyundai Group. Another potential risk cited is the possible unavailability or reduction of government incentives for electric vehicle manufacturers in India, according to the sources.

The company plans to issue up to 142 million shares in the IPO out of a total of 800 million outstanding shares, the sources added.

(With Reuters inputs)