Korea's memory semiconductor corporations SK hynix(000660) will raise a total of $26.5 billion (about 40 trillion won) through an initial public offering (IPO) on the U.S. stock market.
On the 9th (local time), SK hynix said it set the public offering price for American depository receipts (ADR) at $149. Depository receipts are certificates issued in place of a company's home-country shares to improve overseas investors' access to multinational corporations. The current price of $149 represents one-tenth of one common share on the Korea Exchange and is a 3.1% premium to the closing price on the 9th in Korea. If 177.9 million shares are issued as planned, SK hynix is expected to raise 40 trillion won, far surpassing the $25 billion record set by Alibaba in 2014.
According to Bloomberg, the boom in artificial intelligence that has recently shaken global stock markets drew buy orders more than seven times the available amount for the SK hynix ADR listing. In particular, major global funds including Baillie Gifford and Coatue Management reportedly expressed interest in purchasing up to $7 billion (about 10.55 trillion won). Based on the funds raised, SK hynix plans to sharply expand its next-generation High Bandwidth Memory (HBM) production capacity and concentrate investment in new semiconductor manufacturing facilities to be built in Korea, the United States and elsewhere over the coming years to strengthen its market dominance.
Experts largely gave high marks to SK hynix's strategy of directly targeting U.S. capital markets amid semiconductor industry competition that requires astronomical capital. Archie Hart, a fund manager at asset manager Ninety One, said, "As a way to support increased capital expenditure, the idea of raising additional equity is not a bad one." It is interpreted as meaning that the corporations' determination to secure ample firepower to avoid losing the lead in the future artificial intelligence infrastructure market worked positively.
The success of this listing is expected to have a huge impact on the moves of other Asian information technology corporations. Jack Davies, a partner at law firm King & Spalding, said, "If this transaction is absorbed by the market and succeeds as expected, other corporations will follow the precedent and tap into U.S. demand for this industry."
Citing experts, Bloomberg predicted that "after this ADR issuance, more corporations in semiconductors, artificial intelligence infrastructure, networking and advanced hardware with global competitiveness will consider improving U.S. investor access." However, it added that since checks on Chinese corporations remain in place after the Didi Chuxing episode, listing thresholds are likely to remain limited for the time being to core beneficiaries of artificial intelligence.