Hyundai IPO subscribed only 18% on opening day; QIB response lukewarm

India's second-largest car maker Hyundai Motors' initial public offering (IPO), which opened for subscription on October 15, was subscribed only 18 percent or 0.18 times on the first day of bidding. The issue received bids for over 1.77 crore shares, compared to the 9,97,69,810 shares available for subscription.

Retail investors took the lead, subscribing to 26 percent of the issue, while non-institutional investors followed, booking 13 percent so far. Meanwhile, the portion allocated to qualified institutional buyers (QIBs) garnered only 1,389,647 bids, representing 5 percent of the 28,283,260 shares reserved for them.

50% shares for QIB

The Hyundai Motor India IPO has allocated 50% of the shares in the public offering to qualified institutional buyers (QIB), 15% to non-institutional investors (NII), and 35% is allocated for retail investors.

The shares of Hyundai IPO are currently trading at a premium of ₹58 in the grey market. This means that the estimated listing price of the Hyundai IPO is likely to be ₹2018, which is 2.96 percent higher than the IPO price of ₹1960.

Hyundai Motor India set the IPO price range between ₹1865 and ₹1960 per equity share. The company plans to raise ₹27,870.16 crore via IPO. The entire issue consists of an offer for sale (OFS) of 14.2 crore shares, which will be sold by the company's parent, Hyundai Motor Global.

As the IPO is purely an OFS, all proceeds will go to the selling shareholder. Although the parent company will receive all the funds from the IPO, the management stated that the money will be allocated for research and development and the introduction of new innovative products.

Seven shares in each lot

A bidder can participate in the public offering by applying in lots, with each lot consisting of seven company shares. 

Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, HSBC Securities & Capital Markets Pvt Ltd, J.P. Morgan India Private Limited, and Morgan Stanley India Company Pvt Ltd have been designated as the lead managers for the public offer. Meanwhile, KFin Technologies has been appointed official registrar of the book build issue.

(By arrangement with livemint.com)