Hyundai Motor’s India Unit Files for Landmark IPO, Banks Set to Earn $40 Million in Fees

In a major development for India’s automotive and financial markets, Hyundai Motor’s India unit has filed for regulatory approval for a stock market listing in Mumbai. Expected to raise between $2.5 and $3 billion at a valuation of up to $30 billion, this IPO could become the nation’s largest, marking Hyundai’s entry as the first carmaker to go public in India in two decades since Maruti Suzuki in 2003.

Investment banks advising on Hyundai’s IPO, including JPMorgan, Citigroup, and HSBC, stand to earn up to $40 million in fees. This would be the second-highest fee ever for an IPO in India, trailing only the $44 million generated by Paytm’s IPO in 2021. The payout represents a substantial portion of India’s total IPO fee income, which reached $164 million in 2023.

The IPO is structured as an offer for sale, where Hyundai’s South Korean parent company will sell up to 142 million shares, or 17.5% of its stake. This move is seen as a strategic effort to enhance Hyundai Motor India’s market presence and facilitate easier future fundraising. With significant investments already made and further commitments planned, Hyundai aims to strengthen its competitive position against rivals like Maruti Suzuki and Tata Motors.

The Indian stock market has shown robust growth, with indices doubling between 2019 and 2023, outpacing Seoul’s KOSPI index. This surge in equity deals has made India a bright spot for investment banks, which typically face low revenue potential in the country. The Hyundai IPO is anticipated to further boost the market, attracting foreign funds and driving up investment banking fees.

Hyundai Motor India has been a significant player in the Indian market for 28 years, known for popular models like the Santro and Creta. The company is also planning to expand its electric vehicle lineup and infrastructure, aligning with the Indian government’s push to bolster the automotive sector and local manufacturing.

With the IPO expected to launch in the second half of this year, banks and investors alike are eyeing substantial returns, marking a pivotal moment in India’s economic landscape.