South Korean chipmaker SK hynix has raised about $26.5 billion in its IPO on Nasdaq. This is the largest US IPO of a foreign company, surpassing Alibaba’s 2014 record. The company will use this money to meet AI infra demand.
South Korean memory chipmaker SK Hynix has raised about $26.5 billion in its Nasdaq listing. The company has priced its American Depositary Receipts (ADRs) at $149 per ADR, the largest ever US initial public offering (IPO) by a foreign company.
The deal breaks the previous overseas record of $25 billion set by Alibaba during its New York listing in 2014. According to the Korea Herald, it is the largest US depositary receipt offering ever and the second largest initial public offering in the history of the US market.
Conditional trading will begin Friday under the ticker symbol “SKHYV” on Nasdaq, while regular trading is scheduled to begin Monday.
Deal structure and premium pricing
In a statement about the deal structure, SK Hynix announced it would offer 177.9 million American depositary receipts, with each receipt representing one-tenth of a common share traded in Seoul. The deal closed on the Korean stock market at a 2.9 percent premium to the closing price of 2.19 million won ($1,450), which goes against common industry practice of discounting large equity offerings to attract buyers.
The company said it was the first US initial public offering of its kind, priced at a premium. Market sources said total orders during the book-building process were more than seven times the available receipts.
There will be investment in AI and production capacity expansion
Citing a regulatory filing, the news report states that the company plans to use the total proceeds to expand its production capacity to meet the demands of the global artificial intelligence infrastructure. The capital will fund the first fabrication plant at the Yongin Semiconductor Cluster, the P&T7 advanced packaging plant in Cheongju, and the purchase of additional manufacturing equipment.
The company has set aside 11.9 trillion won ($8.5 billion) for extreme ultraviolet lithography equipment, which will be installed by the end of next year.
Global identity and strategy for shareholders
The objective of this listing is to expand corporate exposure among international market participants and reduce the valuation gap that exists between regional peers.
SK Group Chairman Chae Tae-won said in March that the ADR listing would give the company more exposure among U.S. and global shareholders and help make it “a more global company.”
The newly issued shares constitute about 2.5 percent of the number of existing outstanding shares. SK Hynix said the benefits of access to broader capital would outweigh potential share dilution, and it expected additional shareholder-return measures later this year.
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