South Korean memory chip maker SK Hynix has raised $26.5 billion through its first American Depositary Receipt (ADR) offering in the United States. It is now the largest-ever first-time US share sale by a foreign company, according to Bloomberg.
The ADRs are expected to begin when-issued trading on Friday on the Nasdaq Global Select Market under the ticker SKHYV. The symbol will change to SKHY when regular trading starts on July 13.
The offering was led by Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase, along with nine other participating firms.
SK Hynix sets a new record with huge US listing
The company sold 177.9 million ADRs at $149 each. Each ADR represents one-tenth of a common share that trades on South Korea’s stock market.
With this deal, SK Hynix has gone past Alibaba’s famous US debut and now has the third-largest stock market listing in history, according to Bloomberg data.
Shares priced above the Korea market
According to Bloomberg, SK Hynix priced its US shares at around a 3% premium compared to Thursday’s closing price of its ordinary shares in South Korea.
The ADRs are also expected to trade at a higher price than the equivalent shares in Seoul because there are restrictions on converting common shares into US-listed ADRs.
Instead of offering the shares at a discount to attract buyers, the company chose to sell them at a premium. The company seemed to be confident that investors would welcome the listing, despite witnessing wild swings in South Korea over the past few days. It also meant the company avoided raising less money than it believed the shares were worth.
Offering attracts massive demand
The ADR sale was more than seven times oversubscribed, according to Bloomberg. The deal attracted nearly $200 billion in orders, while almost half of all ADRs were bought by the 10 biggest investors.
The top 25 investor accounts received about two-thirds of the shares, and SK Hynix’s management was closely involved in deciding how the shares would be allocated.
Fresh funds to support massive investment
The money raised through the ADR sale is expected to help SK Hynix increase spending as demand for AI computing equipment continues to surge.
The company, along with Samsung Electronics, is preparing to boost investment in South Korea as part of a government-backed $880 billion initiative aimed at strengthening the country’s leadership in AI.
AI demand brings strong investor interest
The listing gives SK Hynix another way to raise money as demand for artificial intelligence (AI) hardware continues to grow. The company is the world’s biggest supplier of high-bandwidth memory (HBM) chips, which are mostly used in AI systems. Investors looking to benefit from the AI boom showed strong interest in the offering.
Its filing showed that investment firms including Baillie Gifford, Coatue Management, and Situational Awareness Partners expressed interest in buying as much as $7 billion worth of ADRs.
SK Hynix has now joined a growing list of technology companies raising huge amounts of money to expand AI infrastructure.
Earlier in June, SpaceX completed the largest initial public offering in history, while Alphabet is preparing to raise $85 billion to support its AI projects.
Investors believe demand linked to AI will continue for years. Memory chip companies were once seen as businesses that rose and fell with PC and smartphone sales, but AI has changed that outlook.
How SK Hynix became an AI winner
The record-breaking share sale marks another milestone in SK Hynix’s rise as one of the biggest names in AI infrastructure. The company moved early into producing HBM chips, while Samsung was slower to respond. That helped SK Hynix become a key supplier to Nvidia.
The US listing is also expected to help SK Hynix close the valuation gap with American rival Micron Technology. Another Asian chip giant, Taiwan Semiconductor Manufacturing Co. (TSMC), has also benefited from a US listing, with its American shares trading at a premium compared to those listed in Taipei.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.