Vikrant Shekhawat : Aug 28, 2024, 08:37 AM
IPO News: Recently, the Indian stock market has attracted the attention of global investors, and the growing interest of South Korean companies in this direction is a prime example of this. A few months ago, Hyundai, the world's leading automobile manufacturer, received approval to bring its IPO in the Indian stock market. This IPO can become the largest IPO of the Indian stock market. Now, another Korean giant, electronics company LG, is also considering its IPO in India. LG CEO William Cho recently told Bloomberg that listing in India could be an important step to revive the company's decades-old consumer electronics business.Why is the Indian stock market becoming a center of attraction?The reasons for South Korean companies to enter the Indian stock market are clear. Hyundai hopes that listing in the Indian stock market will increase the brand image and visibility of its company. Apart from this, listing in the Indian stock market will provide the company with liquidity and public market facilities, which can prove beneficial for business growth. On the other hand, LG wants to enter the fast-growing Indian stock market to achieve its target of $75 billion in electronics revenue by 2030. William Cho said that the company is monitoring the ongoing IPO cases in the Indian market and is also paying attention to the related industry trends. However, the company has not yet determined the possible valuation of its Indian unit.IPO boom in Indian marketIn recent times, the Indian stock market has seen tremendous growth, and this trend is likely to continue in the future. Now that the general elections are over, financial experts expect the second half to prove to be important for the primary market. According to estimates, about 55 companies are planning to raise around Rs 68,000 crore in this time period. Better market sentiments and a potentially stable economic environment may be the reason behind this. In addition, the success of IPOs in the first half of 2024 has also added to the market momentum, with 35 mainboard IPOs garnering an average subscription of 61 times and raising about Rs 32,000 crore.Importance of Indian listing for Korean companiesListing in the Indian stock market can be a significant step for South Korean companies, especially when it comes to overcoming the problem of low valuations in the domestic market. The "Korea discount" is a term used to denote the lower valuations of South Korean companies compared to global competitors due to low dividends and geopolitical tensions. Hyundai and LG's IPOs in India can help them overcome their valuation problem. For example, Hyundai can launch an IPO in India at a valuation of up to $30 billion, half the market cap of its Korean parent.Chaebol: The Korean Business StructureThe term “chaebol” in South Korea is used to describe large family-controlled business groups. These companies, such as Samsung, Hyundai and LG, have played a key role in South Korea’s economic growth. However, the success of chaebols has often been associated with their high debt practices and low valuations relative to global competitors. Listing on the Indian stock market could help these companies reduce their valuation discount to global and Asian competitors.ConclusionThe growing interest of South Korean companies in the Indian stock market is an indication that India is emerging as a major investment destination. The plans of companies like Hyundai and LG to list in the Indian market not only allow these companies to find solutions to their global valuation problems, but also establish India as an important destination for global investors. This development highlights the strength and future prospects of the Indian stock market.