A special-purpose company (SPC) affiliated with Bain Capital that SK hynix invested in has become the single largest shareholder of Kioxia, a Japanese NAND flash maker. As Toshiba continued to sell Kioxia equity, the shareholder ranking was reversed.
According to Kioxia disclosures on the 11th, as of the 3rd, the investment company established by Bain Capital, "BCPE Pangea Cayman2 (Pangea Cayman2·SPC2)," holds 77.4 million Kioxia shares. Its equity stake is 14.19%, making it the largest shareholder, ahead of Toshiba.
Toshiba's holdings have declined to 77,038,200 shares. Its equity stake is 14.12%. This is the result of Toshiba selling Kioxia shares one after another on the market from last month to early this month. As SPC2 did not separately dispose of equity, it ended up holding 361,800 more shares than Toshiba.
SPC2 is an investment entity connected to SK hynix. In 2018, as SK hynix joined the Bain Capital–led consortium to acquire Toshiba Memory, it purchased convertible bonds (CB) issued by SPC2. The investment size was 395 billion yen. Toshiba Memory later changed its name to Kioxia.
According to Kioxia's business report, if the CBs held by SK hynix are converted into shares, most of SPC2's voting rights can be secured. Accordingly, as SPC2 has become Kioxia's largest shareholder, SK hynix has also come to hold a position indirectly connected to Kioxia's largest shareholder.
However, this change in the largest shareholder does not mean SK hynix will participate in Kioxia's management. The entity that directly holds Kioxia shares is SPC2, and SK hynix currently holds CBs issued by SPC2, so it cannot exercise voting rights directly at Kioxia.
For SK hynix to secure voting rights by converting the CBs into SPC2 shares, it must undergo regulatory procedures such as merger review by competition authorities in each country. At the time of the 2018 investment, SK hynix is known to have agreed not to hold more than 15% of Kioxia's voting rights until 2028 unless Kioxia separately agrees.
Kioxia is also paying attention to its alignment of interests with SK hynix. In its annual report in June, Kioxia specified the fact that SK hynix holds CBs that can secure SPC2's voting rights as a "risk factor with potential conflicts of interest." That is because SK hynix and Kioxia compete directly in the global NAND market.
Toshiba has been steadily reducing its Kioxia equity. When Kioxia listed on the Tokyo Stock Exchange in Dec. 2024, Toshiba's equity stake was about 40%, which fell to 18.52% at the end of March this year, 16.10% in May, to 15.10% in mid-last month, and with this sale dropped to the low 14% range. Since being acquired in 2023 by the Japan Industrial Partners (JIP) consortium, Toshiba has been monetizing its Kioxia equity while pursuing improvements in its financial structure and a reshuffle of its business portfolio.
With SPC2 becoming the largest shareholder, the strategic significance of the investment asset held by SK hynix is also likely to grow. Kioxia is a major global NAND supplier that inherited Toshiba's memory business. If mergers and acquisitions (M&A) or governance restructuring occur in the NAND industry going forward, the handling of SPC2 equity and the CBs held by SK hynix could also act as variables.