Hyundai Motor Co.’s Indian subsidiary will move forward with its stock market listing after its initial public offering (IPO) was fully subscribed on the final day.
Record-Breaking Listing
This IPO marks the largest-ever stock market listing in India. However, it faced challenges in attracting enough bids due to weak market sentiment. Indian auto stocks have recently experienced significant declines as the industry adjusts from the surge in demand caused by the pandemic.
Hyundai Motor India Ltd. plans to raise $3.3 billion, with its parent company selling up to 17.5% of its stake. The Indian unit is valued at approximately $19 billion, and shares are expected to begin trading on October 22.
Subscription Challenges
Initially, the offering was only 40% subscribed within the first two days, indicating lackluster demand. Gray market trading for the IPO was also weak. Indian regulations require a minimum subscription of 90% for an IPO to proceed with its listing.
This initial sluggishness contrasts with earlier listings this year, which established India as the world’s busiest IPO market. Recently, however, the broader Indian stock market has underperformed as investor focus has shifted to potential stimulus measures in China.
Strong Institutional Support
Institutional investors played a crucial role, placing bids for more than three times the number of shares allocated to them. As of 1:08 p.m. local time, the retail portion of the IPO was 40% subscribed, according to data from the Bombay Stock Exchange (BSE).
On Monday, Hyundai announced that it had allocated 83.2 billion rupees ($990 million) in shares to 225 anchor investors at the top price of 1,960 rupees per share. Notable buyers included BlackRock Inc. and Baillie Gifford, confirming an earlier report from Bloomberg News.
Ongoing IPO Activity
With the funds raised from Hyundai’s IPO, Indian initial public offerings this year have surpassed $12 billion. This amount exceeds the total raised in the past two years but remains below the record $17.8 billion achieved in 2021, according to Bloomberg data. Other upcoming IPOs include food-delivery company Swiggy Ltd. and the renewable energy division of state-run power producer NTPC Ltd.
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