According to Reuters, three people familiar with the matter have revealed that banks that advise on Hyundai’s Indian initial public offering (IPO) will receive commissions of up to $40 million.
This will be the second highest fee for investment banks to help companies conduct initial public offerings in India.
Photo: Hyundai Motor, Hyundai Motor India subsidiary this month applied to Indian regulators for approval to go public, which is expected to be the largest listing in the country’s history.
It is reported that Hyundai plans to raise about $25 billion to $3 billion through an initial public offering in India, and expects its Indian subsidiary to be valued at $30 billion.
Hyundai’s Indian subsidiary will pay banks, including JPMorgan Chase, Citibank and HSBC Holdings, about 1.
3% of the initial public offering, according to people familiar with the matter.
Citibank and JPMorgan Chase declined to comment on the report, and Hyundai Motor India and HSBC didn’t respond to requests for comment.
For the initial public offering of Hyundai’s Indian subsidiary, the fee distribution among the consulting banks has not yet been decided, but the lead bank will usually get the largest share.
JPMorgan Chase, Citibank and HSBC Holdings are the lead banks for IPO in modern India, according to three people familiar with the matter.
Other banks involved in the deal include Morgan Stanley and India’s Kotak.
Morgan Stanley and Kotak didn’t respond to a request for comment from Reuters.
Indian banks typically charge a fee of 1% to 3% of the size of an initial public offering.
This fee ratio can vary depending on the size and complexity of the transaction, as well as the issuer’s bargaining power.
Bank of New York is likely to earn 3-3.
5 per cent of fees for an initial public offering worth about $3 billion, while banks in Hong Kong, China may charge 2-3 per cent.
Historically, most of the large equity deals in India have come from state-owned companies that offer very low fees.
Western bankers also privately complain about the low revenue potential of the Indian market, but they expect that to change in the coming years as the size and costs of deals rise.
According to Dealogic, Hyundai India’s $40 million of initial public offerings will account for 1/4 of India’s total initial public offerings of $164 million in 2023.
Indian brokerages IIFL, Kotak Mahindra and Jefferies topped the list of fees for initial public offerings in the country last year, according to London Stock Exchange Group.
Last year, initial public offering fees in India rose 55% to $164 million, setting a new record for a total of 234 companies.
In terms of commissions from initial public offerings, banks in New York received $890 million last year, while banks in Hong Kong, China, received a total of $135 million, according to Dealogic.
With dozens of venture capital and private equity-backed companies looking to go public, the highest fees for initial public offerings in India have occurred in almost all of the past three years, according to Dealogic.
The head of Geoffrey Financial Group India said in December that fees charged by Indian investment banks are expected to rise in the coming years as the number of deals increases.
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