Hyundai IPO could beat Life Insurance Corp.’s offering. in 2022, which raised a record $2.7 billion..
The Hyundai India IPO, which was announced earlier this year, has become an indicator of the health of Indian stock markets and especially the IPO market, now that the South Korean automaker has reportedly filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) on June 15 .
Hyundai India expects to raise between $2.5 billion and $3 billion from this IPO, valuing its India operations (which is the third-largest source of revenue after the US and South Korea) at between $22 billion and $28 billion. Depending on the final amount raised, Hyundai India’s IPO could become the second-largest or largest IPO in India after Life Insurance Corporation of India’s $2.7 billion IPO in July 2022, which remains the country’s largest-ever IPO to date. The Hyundai IPO is being managed by investment banks Kotak Securities, JP Morgan, Morgan Stanley and HSBC.
Recent reports also indicate that Korean consumer electronics giant LG Electronics is also considering listing its Indian subsidiary and has hired JP Morgan and Morgan Stanley as advisors, although no official announcement has been made on the timing of the IPO. Some of the domestic companies planning IPOs this year are backed by global private equity, with early investors hoping to profit. This includes the IPO of OYO, India’s most successful hospitality startup, which is seeking to raise $1 billion, and Ola Electric, another venture-backed electric scooter startup, which is seeking to raise around $600 million. Ola is advised by Bank of America Securities India, Goldman Sachs India , Citiglobal India and Kotak Securities.
While the Indian IPO market has been hot in the last few years, the rapidly growing depth of the market is attracting more attention from fast-growing but still private companies as well as subsidiaries of multinationals. As of June 14, 136 companies had completed successful IPOs in India, raising $6.3 billion, including $2.2 billion from Vodafone India’s follow-on share issue in April. In the second half of 2023, the Indian stock market crossed the $4 trillion mark and is currently valued at $4.9 trillion according to the National Stock Exchange of India, displacing Hong Kong to become the world’s fourth largest stock market by market capitalization after Japan. China and USA. The market capitalization of the Indian stock market has grown by $1 trillion in three years, while the Chinese and Hong Kong markets have lost $6 trillion in market capitalization since 2021, according to Bloomberg. This rise in Indian market capitalization has been achieved through a combination of both rapidly growing corporate earnings and jumping valuations. Indian stock markets are also currently among the most expensive in the world, with annual forward earnings of more than 23 times earnings, despite being one of the best-performing major global markets.
The booming IPO trend in India says a lot about the health of the Indian retail investor. India has always seen high demand for IPOs with strong participation from the retail industry. This figure has increased in recent years, with 140 million retail investment accounts now active and driven by the growth of digital infrastructure. Retail investors poured roughly $2 billion a month into mutual funds, and in May put in $4.18 billion, up 83% from last year. Indian mutual fund assets now stand at 58.6 trillion rupees ($702 billion), increasing sixfold between 2014 and 2024.