Hyundai Motor India's $3.3-billion initial public offering was oversubscribed by more than two times on Thursday attracting aggressive bidding from institutional investors, even though pricing concerns deterred retail participation.
Hyundai Motor's first listing outside South Korea is India's largest and the world's second-largest IPO of 2024, and comes as companies rush to go public after a run-up in the Indian equities market this year.
The share sale drew bids worth $5.51 billion at close of bidding at 5.57 p.m. IST (1227 GMT), exchange data showed, 2.37 times the shares on offer.
Institutions, including foreign investors, bid nearly seven times the shares reserved for them, but the retail portion was subscribed just 50%. Oversubscription is a reflection of demand, and there is no provision to allot more shares than those on offer.
"Hyundai's issue is not priced attractively for retail investors and high net worth individuals," said Arun Kejriwal, founder of Kejriwal Research.
Hyundai India is set to price its shares at 1,960 rupees to secure a market valuation of $19 billion, said two sources with direct knowledge of the matter, speaking on condition of anonymity.
That values the company at about 40% of its Korean parent.
Hyundai India did not immediately respond to a request for comment.
Prior to the open bidding process, so-called "anchor" institutional investors, including BlackRock and Fidelity, had on Monday snapped up shares worth nearly $1 billion as part of the offering.
More than 260 companies in India have raised more than $9 billion through IPOs so far this year, according to LSEG data, higher than the $7.42 billion raised in all of last year. That has propelled the country's share in Asia equity capital market deals to a record high.
Employee demand
Indian retail investors, including employees, are allowed to bid a maximum of 200,000 rupees in an IPO.
Employees, which are eligible for a discount of 186 rupees per share on the IPO price, bid for 1.74 times the shares earmarked for them, based on exchange data.
The comparatively low retail participation in Hyundai IPO stands in contrast to previous big stock offerings in India -- the retail portion of Life Insurance Corp's 2022 IPO, India's biggest issue after Hyundai's, was subscribed two times.
The issue prices India's No. 2 carmaker at about 26 times earnings, close to 29 times for market leader Maruti Suzuki.
The slim difference in P/E ratios, despite the big gap in Indian car market share between Hyundai, at 15%, and Maruti, with 40%, spurred concern about the valuation among some analysts.
Car sales too have slowed in India after two years of record highs, with customers delaying purchases on worries about recalcitrant inflation.
Hyundai shares are set to make their trading debut on Oct. 22.
