The much-awaited initial public offering (IPO) of Hyundai Motor India is set to open next week, but the grey market sentiment surrounding the issue seems to have weakened significantly over the past one week. Data shows that the estimated premium that the company’s shares commanded in the unofficial market, known as the grey market premium (GMP), has dropped sharply by over 50% from its level a week ago.
As per market observers, the GMP, which is an indicator of the expected listing gains, has fallen to Rs. 170 per share as of October 11th from Rs. 370 recorded on October 4th. This translates to a major decline of 54% from the levels seen just a week back. The weakening grey market signal comes despite huge retail and institutional investor interest in what is projected to be the largest automotive IPO in India.
Hyundai Motor India, the country’s second largest car manufacturer, will open its Rs. 27,856 crore IPO for subscription between October 15th and 17th. The company, which has set the price band at Rs. 1,865 to Rs. 1,960 per share for the offer, will see its parent company Hyundai Motor offload a 17.5% stake through an offer for sale (OFS) route. Half the issue size will be reserved for qualified institutional buyers while retail investors will get 35% of the total shares on offer.
With global investment giants like Blackrock and GIC Singapore among the anchor investors who have already picked up shares, the issue had started off with robust demand. However, the recent decline in grey market quotes suggests investors may be growing wary in an increasingly volatile market. The automaker itself has witnessed softening sales in recent months. All eyes will now be on the public response and the eventual listing gains when trading begins.
