Is Hyundai IPO banking on success of these 5 foreign firms?

Hyundai Motor India Limited (HMIL) intends to raise $3 billion (approximately Rs 25,000 crore) by selling off around 17.5% of its shares through an initial public offer (IPO), according to industry insiders. This move marks the first time outside South Korea that any division of Hyundai will be listed in the Indian market.

If the IPO proves successful, it will surpass the Rs 21,000 crore share sale of Life Insurance Corporation (LIC), establishing a new record in India. Here is a look into five foreign companies that floated IPOs in India successfully.

Several foreign companies have floated initial public offerings (IPOs) in India, and their success (or lack of it) can be measured by factors such as investor interest, oversubscription rates, listing gains, and long-term performance.

Foreign companies whose IPOs in India succeeded

1. Standard Chartered PLC

   • Sector: Banking and Financial Services
   • IPO Year: 2010
   • Success Indicators: The IPO was oversubscribed by 2.18 times, raising around ₹2,400 crore ($530 million at the time). It maintained a steady performance post-IPO, reflecting strong investor confidence.

2. Brookfield India REIT

   • Sector: Real Estate Investment Trust
   • IPO Year: 2021
   • Success Indicators: The IPO raised ₹3,800 crore ($522 million) and was oversubscribed by 8 times. It had a positive listing day, reflecting strong demand and investor confidence in the REIT market.

3. Nippon Life India Asset Management (formerly Reliance Nippon Life Asset Management)

   • Sector: Financial Services
   • IPO Year: 2017
   • Success Indicators: The IPO raised ₹1,542 crore ($240 million) and was oversubscribed 56 times. It had healthy listing gains, indicating strong investor interest in India's growing mutual fund industry.

4. Schneider Electric Infrastructure Ltd

   • Sector: Electrical Equipment
   • IPO Year: 2011
   • Success Indicators: As part of the French multinational corporation Schneider Electric, this IPO garnered significant interest and investment due to the global reputation of its parent company.

5. ABB India Ltd

   • Sector: Electrical Equipment and Automation
   • IPO Year: 1949 (Initial listing), multiple follow-on offerings
   • Success Indicators: A subsidiary of the Swiss-Swedish multinational ABB, its presence in India has been marked by steady growth and consistent investor interest due to its strong global and local market position.

Reasons for Success:

1. Strong Market Demand: High levels of oversubscription indicate robust demand from investors.
2. Positive Listing Gains: Significant listing day gains reflect immediate investor confidence and market enthusiasm.
3. Industry Potential: Companies in high-growth sectors such as financial services, electrical equipment, and REITs attract substantial investor interest.
4. Solid Fundamentals: Strong financials, a clear growth trajectory, and good governance practices make these IPOs attractive.
5. Market Timing: Timing the IPO during favourable market conditions contributes to its success, ensuring better subscription rates and listing performance.

These examples highlight the successful entry and performance of foreign companies in the Indian market through IPOs.

However, three foreign companies' IPOs failed.

Foreign companies whose IPOs in India failed

1. Atlas Copco India

   • Sector: Industrial Equipment
   • Failure Reasons: The company, a subsidiary of the Swedish multinational Atlas Copco Group, faced poor investor reception due to the high pricing of the shares and concerns about the overall growth prospects of the industrial sector at that time. The IPO did not attract sufficient investor interest, leading to its underperformance.

2. Foseco India

   • Sector: Industrial Manufacturing
   • Failure Reasons: Foseco India, part of the UK-based Foseco group, faced challenges in its IPO due to the niche nature of its products and limited market visibility. Investors were hesitant to invest in a specialized industrial company without a broader market appeal, resulting in a tepid response to the IPO.

3. Euro Multivision

   • Sector: Solar Photovoltaic Cells Manufacturing
   • Failure Reasons: Despite being part of a global industry, Euro Multivision's IPO failed to attract investors due to concerns over its financial stability and the high-risk nature of its business. The IPO was undersubscribed, reflecting the investors' cautious approach towards relatively new and unproven sectors.