Hyundai Motor’s highly anticipated $3.3 billion initial public offering (IPO) for its Indian unit is struggling to gain traction, with just 42% of shares subscribed so far. This marks India’s largest IPO to date but comes amid a backdrop of weakening market sentiment.
As the offering approaches its closing date on Thursday, the lukewarm response from investors and tepid gray market trading have raised concerns about the stock’s debut. The Indian equities market has faced recent challenges, prompting many investors to shift their focus to potential stimulus measures in China. Despite a bustling IPO landscape in India earlier this year, excitement has cooled around Hyundai’s listing.
Hyundai Motor Co. is looking to sell up to a 17.5% stake in Hyundai Motor India Ltd., valuing the company at approximately $19 billion at the high end of the pricing range. Shares are slated to start trading on October 22, but the initial performance has left many wondering about the future.
Interestingly, large IPOs in India often see a surge in subscriptions on the final day, as retail investors catch up with institutional interest. Currently, institutional bids account for 58% of shares, while only 38% of the portion set aside for retail investors has been subscribed. According to local regulations, at least 90% of the total offering must be subscribed for the IPO to proceed, making the clock tick for Hyundai.
Astha Jain, an analyst at Hem Securities Ltd., remains cautiously optimistic, stating, “I’m pretty confident that the issue will sail through.” However, she notes that the hefty valuation of the shares may deter retail traders, especially those looking for quick gains.
Before the public offering, Hyundai raised around ₹83.2 billion ($990 million) by allocating shares to anchor investors at ₹1,960 apiece, which is the upper end of the marketed range. Notable investors such as BlackRock Inc. and Baillie Gifford have come on board.
With Hyundai’s IPO, Indian markets have raised over $12 billion this year, surpassing totals from the previous two years but still trailing behind the record $17.8 billion raised in 2021. Other upcoming IPOs in the pipeline include Swiggy, the popular food delivery service, and the renewable energy arm of state-run NTPC Ltd.
As the countdown to Hyundai’s IPO continues, all eyes will be on investor behavior in these final hours, hoping for a last-minute surge to meet the required subscription levels.
hii Aditi Sahu this side..
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