Hyundai seeks expansion, higher valuation with India IPO

Hyundai's $3 billion IPO in India aims to expand in a fast-growing market and address the "Korea discount."

Hyundai Motor's planned $3 billion IPO in India will help the carmaker score two goals in one go: expand in one of the world's fastest growing markets and tackle the so-called "Korea discount" that suppresses the value of its business back home.

Hyundai, India's second-biggest carmaker behind Maruti Suzuki with a 15% market share, has appointed bankers for the initial public offering which could be the country's biggest ever, and Hyundai's first such listing outside South Korea.

The India IPO is aimed at accelerating its expansion in a country where it has operated for over 25 years and where its affordable cars are popular with price-conscious Indians, according to analysts and four people familiar with the carmaker's plans.

The listing will also reduce Hyundai's dependence on its parent for funds, giving it the financial muscle to take on rivals like Tata and chart its own growth plans in a market that accounts for 14% of total global sales, the sources said.

"India will become the ground to raise money for local projects. Hyundai understands the market dynamics," said Gaurav Vangaal of S&P Global Mobility.

The company plans to use the IPO proceeds largely to fund the launch of EVs in the country, as well as set up a charging network and a battery facility, the sources said. The money will also be used to expand its manufacturing capacity.

India is a "sizable" market for Hyundai, and more capital raised locally will help it build EV infrastructure there, said Kevin Yoo an analyst at Daol Investment & Securities.