MUMBAI (AFP) – Hyundai Motor had a lacklustre Indian market debut yesterday after raising USD3.3 billion in the country’s biggest-ever initial public offering (IPO), with shares down nearly five per cent from their issue price in early trade.
A booming stock market in the world’s fifth-largest economy has stoked an IPO frenzy over the last two years, with start-ups and established companies alike scooping up billions of dollars from investors.
The IPO had valued Hyundai’s India unit, the country’s second-largest car maker by sales, at about USD19 billion, with the South Korean parent firm putting up a 17.5-per cent stake for purchase.
Shares of the automaker fell in the first morning of trade to INR1,870 (USD22.34), down more than 4.5 per cent from their issue price of INR1,960.
“Our journey in India began in 1996… and now, 28 years later, we are going public by launching India’s largest IPO in history,” Hyundai Motor Group executive chair Euisun Chung said 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 great nation.”
While shares in Hyundai Motor India’s IPO were oversubscribed more than two times, retail investors snapped up only half the tranche reserved for them.
Some analysts noted that the company’s valuation could limit listing gains. Mihir Manek of Aditya Birla Capital said prior to the listing that while Hyundai’s outlook in India “continues to be strong”, the offering was at a “rich valuation”.
Other concerns that dogged the IPO included a decline in urban consumer sentiment hitting India’s automobile sales.
Retail vehicle sales fell by more than nine per cent in September, with the Federation of Automobile Dealers Associations saying car yards had reached “historically high inventory levels of 80-85 days”.
