MUMBAI, OCT 22 – India’s Hyundai Motor market underperformed today after raising US$3.3 billion in the country’s biggest initial public offering (IPO), with shares down nearly five percent from their issue price in early trade.
The booming stock market in the world’s fifth-largest economy has fueled an IPO frenzy over the past two years, with startups and corporations alike raising billions of dollars from investors.
The IPO has valued Hyundai’s India unit, the country’s second-largest carmaker by sales, at about US$19 billion, with the South Korean parent firm offering a 17.5 percent stake for the buyout.
The carmaker’s shares fell in early morning trading to 1,870 rupees (US$22.34), down more than 4.5 percent from the company’s issue price of 1,960 rupees.
“Our journey in India began in 1996 and now, 28 years later, we are going public by launching the largest IPO in history in India,” said Hyundai Motor Group executive chairman Euisun Chung at the listing ceremony in Mumbai.
“From the beginning, we knew that India was the future,” he added. “Today’s IPO demonstrates our commitment to this rapidly growing country.”
While shares in Hyundai Motor India’s IPO were oversubscribed more than twice, retail investors took only half of the tranche reserved for them.
Some analysts have noted that the company’s valuation could limit the benefits of a listing.
Aditya Birla Capital’s Mihir Manek said before the listing that while Hyundai’s prospects in India ‘remain strong,’ the offer is at a ‘high valuation.’
Hyundai Motor India managing director Unsoo Kim told reporters two weeks ago that the South Korean firm will use the IPO capital to invest in ‘new products’ and research and development. – AFP
