Initial Thoughts on the Kioxia IPO - Impact on SK Hynix and Samsung Electronics

• Kioxia is getting ready to complete its IPO in Japan as soon as in October. Kioxia's valuation is expected to exceed JPY 1.5 trillion (about USD 10.3 billion).

• SK Hynix's stake in Kioxia (through Bain led consortium) is 19%. SK Hynix's stake in Kioxia would rise to 34% if the CBs are converted into equity.

• The IPO of Kioxia has mixed implications for SK Hynix which is a major shareholder. However, the IPO of Kioxia has a more direct negative impact on Samsung Electronics.

Photo by Pawel Nolbert on Unsplash

Kioxia Holdings (6600 JP) is getting ready to complete its IPO in Japan as soon as in October. Kioxia's valuation is expected to exceed JPY 1.5 trillion (about USD 10.3 billion) according to recent local news accounts. According to recent media, Kioxia may be aiming to raise at least US$500 million in this IPO. This would be the largest IPO in Japan this year.

This is the second attempt of an IPO by Kioxia in the past several years. Previously, Kioxia tried to complete an IPO in 2020 at a target valuation exceeding JPY 2 trillion, which was later reduced to JPY 1.7 trillion won. The previous attempt to list Kioxia in 2020 were met with fierce problems including the COVID-19 pandemic and increasing trading frictions between the US and China resulting in a cloudy outlook on the global semiconductor market.

SK Hynix may reduce some of its stake in Kioxia at the upcoming IPO. The company was spun off from Toshiba in 2017 and later acquired by a consortium led by Bain Capital in 2018. The company was renamed Kioxia. Both Bain Capital and Toshiba plan to reduce their holdings in Kioxia in stages after the company lists.