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Tech

Chipmaker Kioxia to raise 85.3 bn yen in Japan IPO; SK Hynix to retain stake

Aug 29, 2020 (Gmt+09:00)

Global memory-chip maker Kioxia Holdings Corp., held by US private equity firm Bain Capital, is expected to raise 85.3 billion yen (953.6 billion won) in fresh funds through its initial public offering in Japan. South Korea’s SK Hynix Inc., which owns part of Kioxia, says it won’t unload its stake in the Japanese chipmaker even after the IPO.

The Tokyo Stock Exchange gave Kioxia the go-ahead for its IPO plan on Thursday, paving the way for its listing on the Japanese bourse on October 6. The indicative IPO price of 3,960 yen a share would value Kioxia, the world’s second-biggest producer of NAND flash memory chips, at 2.13 trillion yen, making it the biggest Japanese IPO of the year.

The number of new shares to be allotted to general investors is set at 21.56 million or 4.2% of Kioxia’s total shares, which would result in 85.3 billion yen in fresh funds via the IPO. As well as newly issued shares, stocks will also be sold by Bain and other existing investors.

nand-flash-chip-produced-by-sk-hynix

Kioxia was acquired by a consortium led by Bain Capital in 2017. SK Hynix, the semiconductor arm of SK Group, also invested about 4 trillion won ($3.37 billion) in the consortium, of which 1.3 trillion won was used to buy convertible bonds to secure up to a 15% stake in Kioxia.

With the expected new capital, Kioxia said it would build new flash memory chip plants in Japan to better compete against its bigger rival Samsung Electronics Co. But analysts said the plan is likely to hit a snag as the new funding is insufficient to build a new semiconductor plant.

According to The Nikkei, Bain Capital and other exiting investors opposed raising the size of the IPO in fears that it would dilute the value of their holdings and reduce their stake size.

After the latest share sale, Bain’s stake in Kioxia will decline to 47.8% from 56.2%, while Toshiba’s stake will be lowered to 32% from 40.6%.

SK HYNIX TO RETAIN KIOXIA STAKE

Dismissing market talk that SK Group may be tempted to seek capital gains by selling some of its stake in Kioxia, SK said it will continue to keep its investment in the Japanese company.

“We are a long-term investor in Kioxia. We have no plan to retrieve money by selling shares we own,” said an SK Hynix source.

The IPO would reduce the size of SK Hynix’s stake to 14.3% if its bonds are converted into shares.

According to market tracker TrendForce on August 28, Kioxia’s share of the global NAND flash memory market stood at 17.2% in the second quarter, following market leader Samsung’s 31.4%.

By Hugh YH Jeong in Tokyo

hugh@hankyung.com

In-Soo Nam edited this article

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