[NEWS IN FOCUS] Why Hyundai is mulling a $3 billion IPO in India

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[NEWS IN FOCUS] Why Hyundai is mulling a $3 billion IPO in India

Published: 07 Feb. 2024, 17:14 Updated: 07 Feb. 2024, 17:58

SARAH CHEA
[email protected]

Hyundai Motor Group Executive Chair Euisun Chung inspects the company's research center in India in August. [HYUNDAI MOTOR]

Hyundai Motor's expected launch of a $3 billion initial public offering (IPO) in India underscores its robust confidence in the market and its attempt to eye the Southeast Asian country as a new manufacturing hub to replace China and Russia.

Hyundai's India unit is planning to list itself on the stock market to raise at least $3 billion later this year, the biggest listing the country has ever seen, according to Bloomberg and other reports.

Hyundai is already in talks with several banks including JP Morgan and Morgan Stanley, the reports said, though the company did not confirm it.

"We're reviewing various activities such as the listing of overseas subsidiaries, but nothing has been confirmed," Hyundai said Wednesday in a regulatory filing.

Established in 1996, Hyundai's Indian subsidiary currently operates two plants in Chennai in Tamil Nadu in the southernmost part of India, with a capacity totaling 850,000 cars a year.

The $30 billion IPO will have the potential to hinder the expansion of Tesla in India, but also make Hyundai a bigger competition to Tata Motors and Maruti Suzuki, both with a valuation of around $40 billion.

Tesla CEO Elon Musk last year said he is eyeing expansion in the Indian market, hinting at the possibility of opening its first EV plant in Gujarat on the western coast of India.

Hyundai has been growing rapidly in the Indian market over the past two decades while Ford Motor and General Motors have folded their India business. It previously said it would invest $4 billion in India for 10 years to launch new EVs, charging stations and a battery pack assembly unit.

Hyundai Motor employees make cars at its plant in Chennai in Tamil Nadu. [HYUNDAI MOTOR]

Hyundai is eyeing India as the new manufacturing hub for its EV strategy after the sharp drop in Chinese sales in recent years due to tensions over the deployment of the Terminal High Altitude Area Defense system, or Thaad.

Hyundai last year purchased a factory in Talegaon from General Motors after the U.S. carmaker ceased operations in 2017 amid dropping sales. It is reported to have spent 70 billion Indian rupees ($845 million) on its Talegaon plant to upgrade the infrastructure.

Hyundai sold over 600,000 cars in India, an all-time high figure in the 27 years since the Indian subsidiary was formed. It is now in the No. 2 spot behind Maruti Suzuki, according to data from the Society for Industrial and Applied Mathematics.

As a country with the world’s largest population, India has the world’s third-largest auto market after China and the United States and ahead of Japan. Around 4.85 million vehicles were sold in India alone in 2022, up 28.3 percent.

Hyundai Motor shares closed 245,000 won, up 4 percent from the previous trading day.

BY SARAH CHEA [[email protected]]