Case study · Automobiles · IPO (Offer for Sale)
Hyundai Motor India IPO: a record-sized, 100% OFS listing
India's largest IPO at the time was a full secondary sale by the Korean parent. Institutions bought heavily and retail stayed away. It shows how size, pricing and structure shape the aftermarket.
The situation
Hyundai Motor Company sold 17.5% of its Indian subsidiary, the country’s second-largest passenger vehicle maker by volume at the time. The listing let the parent realise value from India and set a public valuation for the subsidiary. The company received no proceeds because there was no fresh issue.
How the deal was structured
- Pure secondary. Because this was a 100% offer for sale, the equity story could not rely on a growth-capex use of proceeds. It rested on the standalone business: market share, SUV mix, exports and margins.
- Priced at the top of the band. The ₹1,960 upper end implied a market value of roughly ₹1.59 lakh crore, a premium to Indian listed peers on several measures.
- Dominated by institutions. The QIB portion was 6.97x subscribed while retail reached only 0.50x. Retail investors largely sat out at that price.
What happened in the aftermarket
The stock listed at ₹1,934 on NSE, about 1.3% below the issue price, and traded lower intraday. With a weak retail book and grey-market premiums fading before listing, there was little demand at day one to push the price up.
Lessons for bankers
- Size changes how the book clears. A ₹28,000 crore offer has to be anchored by long-only funds and sovereign wealth funds. Retail demand at that size is a bonus, not something to rely on.
- An all-OFS issue needs a stronger equity story. With no growth capital going in, investors weigh dividend policy, royalty payments to the parent and related-party terms more heavily.
- Pricing involves a trade-off. Pricing at the top of the band maximises the seller’s proceeds but leaves little for the aftermarket. Agree up front how much early price performance the seller is willing to give up.
- For later Indian subsidiary IPOs by multinationals, governance points such as royalty caps and how independent the board is from the parent should be addressed in the offer document.