Hyundai’s India IPO harks back to another era
Hyundai Motor India Ltd. was the country’s largest ever. That, however, is not its true significance. More interesting is whether the South Korean automaker’s $3.3 billion IPO will be a trendsetter like Colgate-Palmolive Co.’s listing of its local unit nearly 50 years ago.
A comparison with the past may help shed a light on the future. Back then, issuers had to be coerced. India’s foreign-exchange position, never too comfortable, had started looking downright perilous after the 1973 global oil shock. Colgate’s dividend repatriation, many times more than its capital investment, became a lightning rod for lawmakers. They brought in a law to limit multinationals’ holdings in domestic operations to 40%.
Some global firms like International Business Machines Corp. and Coca-Cola Co. decided to pack up in response to the socialist turn in India’s politics. Others like Colgate, Unilever Plc and Cadbury Ltd. chose to stay. In the late 1970s, they sold shares at lowball prices laid down by the controller of capital issues, putting high-quality stocks within reach of what was still a tiny middle class.
That investor base has grown by leaps and bounds; there are now more than 170 million accounts for holding electronic securities. At the same time, the balance-of-payment pressure has eased. India’s foreign-exchange coffers are brimming with nearly $700 billion in assets. Hyundai’s parent offered to sell as much as 17.5% of its local unit not because anyone twisted its arm. The Korean firm did it to take advantage of India’s
