India’s economic rise is prompting South Korean companies to pursue initial public offerings (IPOs) in the Indian market to raise money. By going public in India, these companies plan to solidify their market presence in local markets and secure funds for future investments.
CJ Logistics’ Indian subsidiary CJ Darcl Logistics recently passed the preliminary examination for listing by the Securities and Exchange Board of India, according to industry sources on Mar. 3. CJ Logistics submitted the preliminary listing application in November last year.
Reports suggest that CJ Darcl is preparing to list on the local stock market. The company has been briefing investors at home and abroad and plans to finalize the remaining procedures, including demand forecasting, to list as early as the first half of this year. This is the first time an overseas subsidiary of a Korean logistics company is seeking an IPO in India. The company stated that the opportunity for business expansion in India, along with the growth of the Indian market, was the driving force behind the decision to go public.
In 2017, CJ Logistics gained a 50% stake in Darcl Logistics, an Indian logistics company which led to the renaming of the company to CJ Darcl. CJ Logistics aims to expand its business in India by leveraging CJ Darcl’s existing bases and customers across the country.
As of the end of last year, the Indian stock market surpassed $4 trillion in market capitalization for the first time in history, overtaking Hong Kong to become the world’s fourth-largest stock market. India’s economy is expected to grow by 6.5% this year, more than double the global average of 3.1%.
Hyundai Motor India has also finalized the selection of a lead manager with the aim of listing locally later this year. Hyundai Motor India is expected to raise around $3 billion (4 trillion won). The company plans to use the proceeds to meet future local investment needs.
Jefferies, a U.S. investment bank, forecasts that the Indian stock market capitalization will more than double to $10 trillion by 2030. Returns are expected to be in the 8-10% range over the next five to seven years.
