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Wednesday / 4 December 2024
HomeNewsHyundai gets R58-billion boost

Hyundai gets R58-billion boost

Hyundai Motor India’s record initial public offering (IPO) was oversubscribed more than two times on Thursday, driven by strong institutional demand despite tepid interest from smaller investors.

The nation’s largest-ever listing drew bids for more than six times the shares set aside for foreigners and local money managers.

The retail tranche was barely 50% subscribed as the three-day bidding period ended, according to data on the BSE’s website.

The offering will raise $3.3 billion (R58 billion) at the upper end of the indicated price range, with its Korean parent selling a stake of as much as 17.5%.

The Indian unit is valued at about $19 billion (R334 billion), and shares are set to start trading on Oct. 22.

The sale was barely 40% subscribed in the first two days amid weak demand, as the auto industry witnesses a cooling from the pandemic-driven demand surge.

Bids from institutions picked up pace Thursday, more than making up for the poor participation by retail investors.

The shares were priced at a “hefty valuation, leaving very little on the table for investors,” said Astha Jain, an analyst at Hem Securities.

“Retail traders who look to cash out quickly are unlikely to participate.”

The initial sluggishness contrasted sharply with the stellar performance of listings earlier this year that made India the world’s busiest IPO venue.

The nation’s broader stock market has underperformed in recent weeks as investor attention shifts to prospects of China stimulus.

Hyundai on Monday said it allocated 83.2 billion rupees (R17.4 billion) worth of shares to 225 anchor investors at 1,960 rupees (R410) apiece, the top of the price band.

Buyers include BlackRock and Baillie Gifford, confirming an earlier Bloomberg News report.

The entire IPO proceeds will go to the parent, which has not clarified how they will be used. This reason may have prompted retail investors from not bidding “in an aggressive manner,” said Prashanth Tapse, an analyst at Mumbai-based Mehta Equities.

With Hyundai’s proceeds, Indian IPOs will have raised more than $12 billion (R211 billion) this year, eclipsing volumes for the past two years but still below the record $17.8 billion (R313 billion) raised in 2021, according to data compiled by Bloomberg.

Other pending debuts include food-delivery company Swiggy and the renewable-energy arm of state-run utility NTPC.

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