Satyanarayan Mohapatra
Hyundai Motor India recently celebrated a significant milestone with the largest IPO in Indian stock exchange history, raising an impressive Rs 27,855 crore. However, this achievement came at a substantial cost, setting a new record for IPO expenses in India. The South Korean automaker invested a staggering Rs 624 crore (approximately $74 million) to navigate the complexities of the public offering.
Despite a lukewarm reception on its October 22nd debut, with shares listing below the initial offer price, the sheer magnitude of the IPO and its associated costs have sparked considerable interest. A closer look at the final IPO documents reveals a detailed breakdown of these expenses, providing insights into the financial outlay involved:
Merchant Banking Fees:
A significant portion of the expenditure, a considerable 79% (Rs 494 crore), was allocated to investment bankers responsible for orchestrating the IPO process.
Regulatory and Listing Fees:
Fees associated with regulatory filings and listing on stock exchanges amounted to Rs 45 crore.
Advertising and Marketing Costs:
To generate excitement and attract potential investors, Hyundai allocated Rs 25 crore for advertising and marketing initiatives.
Auditors' Fees:
Auditors tasked with verifying the company's financial health received Rs 13 crore for their services.
The Expenses:
Hyundai's IPO expenditure surpasses the amounts spent by other companies that have undertaken substantial IPOs, including Paytm and the Life Insurance Corporation of India (LIC), which previously held the record for India's largest public offering. This raises questions about the cost-effectiveness of such significant spending, especially considering the company's relatively subdued market debut. While the IPO's high expenses are a noteworthy point of discussion, it's important to consider the broader implications. Hyundai's IPO represents a significant milestone for the Indian capital market, demonstrating its capacity to attract major global players. Moreover, the listing offers investors an opportunity to participate in the growth of one of India's leading automobile manufacturers.
DISCLAIMER: This brief is based on information from publicly available sources and reflects the author's interpretation of the topic and do not reflect Prameya's or Prameya News7 editorial stance.
