Hyundai to Pay $40 Million Fee to Banks Advising on India IPO, Second Biggest Payday

Hyundai Motor's India unit recently filed for regulatory approval for a listing that could be the largest in India, aiming to raise around $2.5-$3 billion. Banks advising Hyundai on this IPO, including JPMorgan, Citigroup, and HSBC, could earn up to $40 million in fees, making it the second-highest fee for an IPO in India.

This is notable in a market where banks often struggle with cost-conscious clients and fewer large deals.

Hyundai India will pay the banks 1.3% of the IPO size, sources said. This would amount to $40 million if the deal reaches the top end, second only to the $44 million earned by banks from Paytm's IPO in 2021. Typically, banks in India earn between 1% and 3% of an IPO's size as fees, with larger deals providing more negotiation leverage to the issuers.

A $3 billion IPO in New York could see banks earning 3%-3.5% in fees, while in Hong Kong it could be 2%-3%. Indian banks earned a total of $164 million in IPO fees in 2023, a 55% increase from the previous year, according to Dealogic.

The Hyundai India IPO, likely to be launched in the second half of this year, could pay banks a combined $33 million in fees at the lower end of the expected size. Lead banks typically get the largest share of fees, and for this IPO, JPMorgan, Citi, and HSBC are the lead banks.

Other banks involved include Morgan Stanley and India's Kotak.

Bankers anticipate a rise in large private company IPOs and investment banking fees in India over the next few years due to growing valuations and foreign investment. This trend has been seen in the last three years, with many venture capital and private equity-backed companies seeking listings.

Jefferies Financial Group expects investment banking fees in India to increase as deal numbers grow, according to its country head in December last year.

Dee Development’s Stock Surges 65% on Debut

Shares of piping solutions provider Dee Development Engineers ended with a 65% premium against the issue price of Rs 203 on their first trading day. The stock listed at Rs 325, a 60% increase from the issue price on the BSE, and rose to 80.14% during the day, closing at Rs 335.

On the NSE, it began at Rs 339, up 66.99%, and ended at Rs 333.33, a 64.20% increase.

The company's market valuation reached Rs 2,313.31 crore, with 28.76 lakh shares traded on the BSE and 335.44 lakh shares on the NSE. The IPO of DEE Development Engineers was subscribed 99.56 times on the last day of subscription.

The Rs 418-crore IPO included a fresh issue of up to Rs 325 crore and an offer for sale of up to 45,82,000 equity shares, with a price range of Rs 193-203 per share.