India’s unregulated gray market is showing signs of cooling excitement surrounding Hyundai Motor India Ltd.’s $3.3 billion initial public offering (IPO), which was expected to be the largest in the country’s history.
On Monday, shares of Hyundai Motor Co.’s Indian unit were trading at a premium of just 60 rupees above the high-end price of 1,960 rupees ($23.30) per share. This is a stark drop from the 1,000-rupee premium reported two weeks ago, according to investors active in the gray market.
The decline in demand comes amidst increasing competition in India’s auto market and the impact of broader geopolitical tensions. “The initial euphoria is over,” said Mumbai-based trader Gaurav Thakker. He pointed to the ongoing conflict in the Middle East and lackluster auto sales in India as factors influencing Hyundai’s IPO expectations.
Gray market trading allows investors to agree on a pre-listing price for shares before they officially trade. The shift in sentiment around Hyundai’s offering mirrors the 2022 IPO of Life Insurance Corp. of India, which also saw its shares trade at a discount in the gray market before a weak debut.
Hyundai Motor’s shares will start trading in Mumbai on October 22. The Korean parent company plans to sell 142.2 million shares, or a 17.5% stake, valuing Hyundai Motor India at around $19 billion.