India's capital market surge and IPO boom
India's stock market, valued at $4 trillion, has emerged as a robust alternative to China, surpassing Hong Kong to become the fourth-largest globally.
With the Nifty 50 index rising by 20 per cent in 2023 and continuing its record-breaking run into 2024, India's capital market has become a focal point for domestic and foreign investments.
The second half of 2023 witnessed a surge in IPOs, a trend anticipated to persist in 2024, driven by expectations of policy stability.
Hyundai's potential IPO aligns with this trend, positioning the company to leverage India's flourishing capital markets.
Hyundai's IPO talks with major investment banks
In its pursuit of an Indian IPO, Hyundai has engaged in discussions with prominent investment banks such as JP Morgan, Morgan Stanley, Citi, and Bank of America.
While formal appointments are yet to be made, these talks reflect Hyundai's commitment to exploring all options for its India business.
Hyundai's move follows a pattern of companies like SoftBank-backed Ola Electric and Swiggy, expected to go public in 2024.
Although there has been no official comment from the mentioned banks, Hyundai's plan is gaining momentum in the financial sector.
Hyundai's India push and competition with Tesla
Hyundai, India's second-largest car maker by sales, has been strategically reinforcing its presence in India and the United States, redirecting focus after scaling back production in China and exiting the Russian market.
Entering India over two decades ago, Hyundai is the only foreign player to have secured a significant market share alongside Maruti Suzuki.
Hyundai's move to go public comes at a crucial juncture as it faces growing competition from domestic players like Tata Motors.
Analysts speculate that the IPO could enhance Hyundai's position against Tesla in the Indian EV market.
"Hyundai's India unit IPO talks come amid Tesla's plan to enter India, and if Hyundai's unit manages to go public in the country, it might help Hyundai better compete with Tesla in the Indian EV market in the future," noted industry analysts.
Future investments in India's EV market
Hyundai has outlined ambitious plans for the Indian market, announcing intentions to invest close to $4 billion over the next decade.
These funds are set for launching new electric vehicles, expanding charging infrastructure, and establishing a battery pack assembly unit.
Notably, part of this investment involves acquiring a former General Motors plant, a strategic move to bolster production capacity in India.
Currently, Hyundai manufactures cars at its Chennai plant, often referred to as the "Detroit of Asia".
(With inputs from Reuters)