Hyundai IPO a test of investor confidence in India’s ambition to be manufacturing powerhouse

Hyundai Motors India’s US$3.3 billion IPO, the country’s largest ever public share offering, opened on Tuesday in a test of global investor confidence in the country’s ambition to become a manufacturing powerhouse as it positions itself as a key alternative to China.

The share offer from the nation’s second-largest car manufacturer, after Japan’s Suzuki Motor Corporation, will remain open for subscription between Tuesday and Thursday. The shares are due to be listed on Indian bourses on October 22.

Hyundai India has not issued new shares for this IPO. Instead, its South Korean parent company will sell up to 17.5 per cent of its stake in the wholly-owned Indian subsidiary.

The Singapore government and BlackRock together picked up stakes worth a total of US$77.3 million on Monday, while Fidelity bought shares worth US$76.5 million as anchor investors – institutional investors who are allotted shares in an IPO before it opens for retail investors. Domestic mutual funds were also allocated shares worth a total of US$340 million, according to Reuters.

The IPO proceedings could help Hyundai narrow the gap with market leader Maruti Suzuki in India, which overtook Japan as the third-largest automobile market. It could also help Hyundai expand its manufacturing and research facilities in India to serve global markets, analysts say.

Hyundai’s IPO is the largest among several sizeable public listings in India launched in recent years, surpassing Indian mobile payments company Paytm’s US$2.19 billion IPO in 2021 and state-run Life Insurance Corporation’s US$2.45 billion listing in 2022.