Hyundai Motor India's record $3.3b IPO oversubscribed on final day
Friday, 18 October 2024
The $3.3-billion IPO of Hyundai Motor India, the country's largest yet, was fully subscribed on its final day on Thursday as institutional investors bid aggressively, though pricing concerns deterred retail investors, reports Reuters.
As companies rush to go public after a sharp run-up in the Indian equities market this year, Hyundai Motor's first listing outside South Korea ranks as India's biggest ever and the world's second-largest IPO in 2024.
Hyundai India is set to price its shares at 1,960 rupees to secure a market valuation of $19 billion, said two sources with direct knowledge of the matter, speaking on condition of anonymity.
That values the company at about 40 per cent of its Korean parent.
"This flotation was too big to fail," said Prashanth Tapse, senior vice president of research at Mehta Equities, adding that recent IPO successes and Hyundai's international image also helped.
Investors bid for more than twice the shares on offer by 3.21 p.m., with qualified institutional buyers, including foreign investors, domestic banks and mutual funds, bidding for nearly seven times the 28.3 million shares reserved for them.
With no provision to allot more shares than those on offer, the oversubscription is a reflection of demand.
The exercise began on Tuesday but was led until early Thursday by employees, who bid for about 1.7 times the 778,400 shares earmarked for them.
Over 260 companies in India have raised more than $9 billion through IPOs so far this year, according to LSEG data, higher than the $7.42 billion raised in all of last year. That has propelled the country's share in Asia equity capital market deals to a record high.
Tapse was among the analysts who have pointed to retail investors' concerns about valuations, the lack of new shares in the issue, and recent industry woes, as sales slow and inventory grows.
Car sales have slowed in India after two years of record highs, with customers delaying purchases on worries about recalcitrant inflation.