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Hyundai explores USD 3 bn IPO for India unit at up to USD 30 bn valuation, sources say

Hyundai Motor plans to take its Indian unit public to raise at least USD 3 billion in what would be the country's largest initial public offering, two sources said, as the South Korean company doubles its bet in the key growth market ahead of a widely expected entry from Tesla.

Hyundai Motor India is in early talks about an initial public offering (IPO) and has held talks with several banks, the two people briefed on the matter said, on condition of anonymity, because the discussions have not yet become public.

Hyundai IPO

The fundraising by Hyundai, India's second-largest automaker with a 15% market share, would value its India operations at up to USD 30 billion, more than half of its USD 42 billion market capitalization in Seoul. The company's shares rose 5% on Monday, their highest level in nearly three years.

A valuation of up to USD 30 billion would put Hyundai's Indian unit behind rivals such as Tata Motors at USD 41.43 billion and Maruti Suzuki India at USD 40.11 billion.

A spokesman for Hyundai's Indian unit declined to comment.

The company is exploring "unlocking value for its business in India" through an IPO, the two people said.

"They want to cash in on the IPO boom in India. Indian capital markets are hardly that prominent compared to other countries but are standing out this time around," one of the two people added.

Fueled by billions of dollars in domestic and foreign funds, India's USD 4 trillion stock market has emerged as a fast-growing alternative to China, recently overtaking Hong Kong to become the world's fourth-largest.

India's Nifty 50 index rose 20% in 2023 and extended its record until 2024.

Initial public offerings in India witnessed a boom in the second half of 2023, and bankers expect this to continue in 2024 amid hopes for political stability. Ola Electric and SoftBank-backed food delivery company Swiggy, among others, are expected to list this year.

In 2023, 239 companies raised USD 6.78 billion through IPOs in India, according to LSEG data.

India's largest IPO was the 2022 IPO of the largest insurance company, LIC, raising as much as USD 2.7 billion.

“For its IPO in India, Hyundai has held talks with investment banks JPMorgan, Morgan Stanley, Citi, and Bank of America, although no formal appointments have been made,” the two people said.

Bank of America declined to comment, while the other three did not respond to a request for comment.

Hyundai's push towards India

Hyundai, India's second-largest carmaker by sales, is now doubling its presence in the South Asian country and the United States after cutting production in China after years of losses there and exiting Russia after selling two Russian factories.

It entered India more than two decades ago and is the only foreign player to become dominant alongside market leader Maruti Suzuki, while companies like Ford Motor Company and General Motors have ceased operations in India.

Hyundai's Indian market share has peaked at nearly 20%, mainly due to its broad portfolio of small cars and understanding of what buyers want, but it is seeing increasing competition from local players such as Tata Motors, which has launched a series of cars, New SUVs, and electric cars.

Hyundai now has about 15% of the Indian auto market share, having sold 567,000 cars in the last fiscal year.

Analysts pointed out that talks about going public with Hyundai's Indian unit come amid Tesla's plan to enter India, and if the Hyundai unit can go public in the country, this could help Hyundai better compete with Tesla in the Indian electric car market in the future.

Hyundai said it plans to invest about USD 4 billion in the Indian spare parts market over the next decade to launch new electric vehicles, charging stations, and a battery assembly unit. Part of the money is being invested in purchasing a former General Motors plant to help Hyundai expand its production.

Hyundai currently manufactures cars at its factory in the southern Indian city of Chennai, known as the Detroit of Asia.

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