South Korean chipmaker SK Hynix's planned $28 billion US listing has been oversubscribed multiple times ahead of pricing on Thursday, according to a Bloomberg report on Tuesday. The offering attracted strong interest from approximately 1,000 institutional investors participating in the company's marketing call, with the American depositary shares set to debut on Nasdaq Global Select Market on Friday. The oversubscription reflects robust demand despite a prolonged sell-off in memory chip stocks, with the listing poised to become the largest-ever US debut by a foreign company, surpassing Alibaba's $25 billion listing in 2014.
ADS Pricing Scheduled for Thursday Debut
The American depositary shares offering is expected to be priced on Thursday, ahead of the stock's Nasdaq Global Select Market debut on Friday, according to the Bloomberg report. According to an SEC filing on Monday, SK Hynix is looking to sell 177.9 million ADS. The filing mentioned a reference price of KRW242,500 per ADS ($158.14), based on SK Hynix's closing price on July 3. Reuters previously reported that the ADSs are expected to be priced at $166 each.
Institutional Investors Commit $7 Billion in Cornerstone Interest
Around 1,000 institutional investors participated in the company's marketing call, according to the Bloomberg report. The offering has attracted strong interest from global long-only investors and technology-focused funds. Funds managed by Baillie Gifford, Coatue Management, and Situational Awareness Partners have indicated interest in buying up to $7 billion worth of ADSs.
SK Hynix Offering Structure and Proceeds Allocation
The offering is structured to ensure that SK Square, the company's largest shareholder, retains at least a 20% stake, in line with South Korean regulations. SK Hynix said the proceeds will be used for general corporate purposes, including capital spending on new semiconductor manufacturing facilities in South Korea and the purchase of advanced extreme ultraviolet (EUV) lithography equipment.
Memory Chip Stocks Decline Amid Sector Rotation
The IPO comes at a time when semiconductor stocks are facing heavy selling pressure. Shares of Micron Technology (MU) fell more than 6%, SanDisk (SNDK) crashed nearly 10%, and Western Digital Corp. (WDC) slumped 9% as of this writing. Mike Bailey, director of research at FBB Capital Partners, told CNBC on Tuesday that expectations are up, and fundamentals are struggling to meet the sky-high demands, which is fueling the decline. "I would expect the rotations that we've seen to continue," Bailey said.
The Roundhill Memory ETF (DRAM) and VanEck Semiconductor ETF (SMH) also posted sharp losses. Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) fell 0.2%, Invesco QQQ Trust (QQQ) declined 1.3%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) was trading 0.3% lower.
FAQ
What is the size of SK Hynix's planned US listing?
SK Hynix's planned US listing is valued at $28 billion, which would make it the largest-ever US debut by a foreign company, surpassing Alibaba's $25 billion listing in 2014.
When will SK Hynix's American depositary shares be priced and debut?
The American depositary shares offering is expected to be priced on Thursday, with the stock set to debut on Nasdaq Global Select Market on Friday, according to a Bloomberg report on Tuesday.
How many institutional investors participated in SK Hynix's offering?
Around 1,000 institutional investors participated in the company's marketing call, with funds managed by Baillie Gifford, Coatue Management, and Situational Awareness Partners indicating interest in buying up to $7 billion worth of ADSs.
