Which investors may drive into anchor book of Hyundai India's $3.3-bn IPO?

On June 15, Hyundai Motor India Limited filed its draft red herring prospectus ( DRHP) with the regulator.

South Korean auto giant Hyundai Motor Co's Indian arm Hyundai Motor India Limited is all set to shatter the previous record set by LIC and launch the country's biggest ever initial public offer (IPO) next week.

At the higher end of the targeted valuation range of $19 billion, the issue, which involves a pure OFS or offer for sale by the parent (which will dilute 17.5 percent stake ), is looking to raise $3.3 billion or around Rs 27,856 crore, multiple people in the know told Moneycontrol on the condition of anonymity. In comparison, the state-run insurer raised $2.7 billion in 2022.

So, which investors are likely to participate in the anchor book of this IPO?

According to multiple sources in the know, Hyundai has held discussions with more than 100 top global and domestic public market investors for participation in its anchor book, namely GIC, Capital Group arms, Fidelity Group arms, Government Pension Fund Global ( Norges Bank Investment Management) , BlackRock, T Rowe Price , Baillie Gifford and SBI MF, HDFC MF, ICICI Prudential MF, Nippon India MF, Kotak MF, Axis MF, amongst other players.

When contacted, T Rowe Price, Axis MF and Baillie Gifford declined to comment. Moneycontrol could not elicit an immediate comment from Hyundai Motor Co and the other investors. Email queries have been sent and this article will be updated as soon as we hear from them.

As per the red herring prospectus, the public issue will open for retail and other investors on October 15 and close on October 17. It will open for institutional investors ( anchor book) on October 14. A price band of Rs 1,865-1,960 per share has been fixed for the issue.

On June 15, Hyundai Motor India Limited filed its draft red herring prospectus ( DRHP) with the regulator.

"The objects of the offer are to carry out the Offer for Sale of up to 142,194,700 Equity Shares of the face value of Rs 10 each by the Promoter Selling Shareholder and to achieve the benefits of listing the Equity Shares on the Stock Exchanges," said the draft red herring prospectus (DRHP).

"Further, our Company expects that listing of the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India," the DRHP added.

Hyundai Motor India Limited is India's second largest carmaker after Maruti Suzuki in FY24 in terms of passenger sales volumes. The share price of rival Maruti Suzuki India has risen by 22.4 per cent in the last one year. The market leader had a market cap of around Rs 3.94 lakh crore at the end of day's trade on October 8.

Citi, HSBC Securities, JPMorgan, Kotak Mahindra Capital and Morgan Stanley are the investment banks advising on the transaction with law firm Shardul Amarchand Mangaldas acting as the company counsel, Cyril Amarchand Mangaldas as the banks counsel and Latham and Watkins acting as the international counsel.

A closer look at Hyundai Motor Co's Indian operations

The firm sells four-wheeler passenger vehicles and has a portfolio of 13 models across multiple passenger vehicle segments by body type such as sedans, hatchbacks , sports -utility vehicles and battery electric vehicles. It also manufacture parts such as transmissions and engines.

According to its DRHP, the automaker has been the second largest auto OEM in the Indian passenger vehicles market since fiscal 2009 (in terms of domestic sales volumes).

"We have also been India’s largest exporter of passenger vehicles from fiscal 2005 to the first 11 months of fiscal 2024, having exported the highest cumulative number of passenger vehicles for the same period, according to a Crisil report. Since 1998 and up to March 31, 2024, we have cumulatively sold nearly 12 million passenger vehicles in India and through exports.

"In CY2023, we were among the top three contributors to HMC’s global sales volumes, and our contribution to HMC’s sales volumes has increased from 15.48 percent in CY2018 to 18.19 percent in CY2023," its DRHP added/