Sources: Hyundai wants to list its Indian division

South Korean car company Hyundai Motor Co. plans to list its Indian division to raise at least $3 billion in a deal that would be the country's largest initial public offering (IPO), sources said.

According to them, Hyundai Motor India is in early talks to launch an initial public offering and has held talks with several investment banks, such as JP Morgan Chase & Co., Morgan Stanley, Citi and Bank of America.

The fundraising by Hyundai, India's second-biggest carmaker with a 15 percent market share, would value the local operations at no more than $30 billion, more than half of its market capitalization, of 42 billion dollars, on the Seoul Stock Exchange. The company's shares rose nearly 5 percent yesterday on the Seoul Stock Exchange to hit 238,000 won - the highest level in nearly three years.

A valuation of as much as $30 billion would put Hyundai's India division behind rivals such as Tata Motors, which has a market capitalization of $41.43 billion, and Maruti Suzuki India, with $40.11 billion.

A spokesman for the Indian division of Hyundai declined to comment on the information published by Reuters.

The quoted sources also said, "The company is exploring unlocking value for its India business through IPO. The carmaker wants to benefit from India's IPO boom. Indian capital markets have not stood out like this before compared to other countries".

Fueled by billions of dollars - domestic and foreign money - India's $4 trillion stock market has become a fast-growing alternative to China, recently overtaking Hong Kong. Currently, India is the fourth largest market in the world.

India's benchmark Nifty 50 is up 20% in 2023, continuing its upward trend in 2024. Indian IPOs saw a boom in the second half of last year, and bankers expect this to continue in 2024, amid hopes for political stability, Reuters notes.

SoftBank-backed electric two-wheeler maker Ola Electric Mobility and food delivery firm Swiggy, among others, are expected to list this year.

In 2023, 239 companies raised $6.78 billion through IPOs in India, according to LSEG data. The largest IPO in India was the 2022 listing of the largest local insurer, Life Insurance Corp. This deal raised up to $2.7 billion.

• Hyundai expands in India

Hyundai, India's second-largest carmaker by sales, is now increasing its share in the South Asian country and the United States after cutting production in China due to losses. In addition, the company left Russia after selling its two local factories in the context of Moscow's war with Ukraine.

Hyundai entered India more than two decades ago and is the only foreign player to become dominant alongside market leader Maruti Suzuki, while companies such as Ford Motor Co. and General Motors Co. (GM) have withdrawn from this country. At one point, Hyundai's share of the Indian market peaked at nearly 20%, mainly due to its wide portfolio. However, the South Korean company faces growing competition from domestic players such as Tata Motors, which has launched a number of new SUVs and electric cars. Hyundai, which now has a share of around 15%, sold 567,000 vehicles in the last fiscal year in the Indian car market.

Analysts noted that the IPO talks of Hyundai's Indian division come at a time when US company Tesla Inc. he wants to enter India. Hyundai plans to invest nearly $4 billion in the Indian auto parts market over the next decade to launch new electric vehicles, charging stations and a battery assembly facility. Some of the money is being invested in buying a former GM plant that is helping Hyundai expand production.

Hyundai currently produces cars at its plant in the city of Chennai, in southern India, considered the "Detroit of Asia".