Hyundai’s India IPO Harks Back to Another Era
In the 1970s, New Delhi forced multinationals to cut stakes in local units. Now they're doing it willingly, which may have a salutary impact on markets.
A seminal moment.
Photographer: Anindito Mukherjee/BloombergLast week’s initial public offering by 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%.