Key takeaways
- Hyundai Motor India was the nation’s largest IPO ever, raising $3.3 billion.
- Major long-only institutional investors were attracted to the long-term value prospects of the Korean carmaker’s Indian unit that correspond with the country’s rapidly growing middle class.
- The India IPO market has had a strong year, leading the way in Asia with a number of big-ticket stock listings and record levels of issuance.
India, the world's fastest-growing large economy and most populous nation, can now also claim the largest common stock initial public offering (IPO) this year with the $3.3 billion listing of Hyundai Motor India.
J.P. Morgan acted as senior book runner lead manager for Hyundai Motor India in the record-breaking pure stock offering. The car manufacturer has been operating in India since 1996 and is currently number two in the Indian passenger vehicle market, with a range of 13 models. SUVs make up the bulk of sales for the company in India, with a growing electric vehicle (EV) segment in development.
Some 142.19 million shares were offered at a price band of 1,865 Indian rupees ($22.18) to 1,960 rupees and the record $3.3 billion IPO was two times oversubscribed led largely by institutional investors.
Hyundai domestic sales volume in India
SUV sales make up the bulk of Hyundai’s domestic sales volume in India, with 63%, followed by 23% hatchbacks and 14% sedans.
For most IPOs in India, the retail segment generally makes up a large share of the offering. Hyundai Motor India attracted $850 million of interest from retail and high net worth individuals, making up a sizable domestic investor tranche on an absolute basis.
Major foreign long-only investors were attracted to the long-term value prospects of the company that correspond with the country’s rapidly growing middle class, which represents around a third of the population, while domestic Indian investors got an opportunity to back the Indian passenger segment with an alternative household name.
The car manufacturer plans to launch its latest EV model, the Creta Electric, an EV version of its popular sport utility vehicle in India in the next quarter. The Creta EV will be produced in the carmaker’s southern India manufacturing plant in Chennai, with plans to roll out four additional battery powered vehicles by 2030.
“We have a long history of working with Hyundai in Korea and this IPO is a great example of how J.P. Morgan can deliver cross-border outcomes for our clients, in this case, the Korea-India corridor.”
Abhinav Bharti
Head of India Equity Capital Markets at J.P. Morgan
Cross-border connectivity
Parent group Hyundai Motor Company has been a longstanding client of J.P. Morgan and is the first example of a Korean corporate client affiliate listing on the India equity market.
“We started talking to Hyundai in Korea about this idea around seven years ago, so it was a long time in the making. Every couple of years we would ask the question because we could see how significant the value unlock could be for the business,” said Abhinav Bharti, head of India Equity Capital Markets at J.P. Morgan.
“We have a long history of working with Hyundai in Korea and this IPO is a great example of how J.P. Morgan can deliver cross-border outcomes for our clients, in this case, the Korea-India corridor,” Bharti said.
Indian equity markets scaled all-time highs this year, with the blue-chip NSE Nifty 50 climbing as much as 200% since the low of the pandemic in March 2020, as investors have grown increasingly positive on India’s long-term economic growth potential.
“The listing not only capitalizes on heightened levels of investor activity in India equities, but also signals the beginning of even closer ties between the India and Korea capital markets,” said Jinsoo Ha, head of Korea Equity Capital Markets at J.P. Morgan.
The India IPO market has led the way in Asia with a number of big-ticket stock listings and record levels of issuance. Investor interest in the private equity space is also booming, with India now a top-three market for many sponsors.
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