SK Hynix Inc. is reportedly instructing investors on an intended pricing of $149 per American depositary receipt (ADR) for its US listing. This proposed price would place the ADRs at approximately 3.1% above the Thursday closing price of its common shares in Seoul, which ended at 2.186 million won ($1,445) each. Each ADR represents one-tenth of a common share.
At this $149 per ADR price point, the offering is projected to raise around $26.5 billion. This amount would make it the largest ever first-time share sale in the US by a foreign company, surpassing Alibaba Group Holding Ltd.'s $25 billion debut. Previously, estimates had suggested a higher offering value of $29.4 billion with ADRs at $166 each.
The offering involves the sale of 177.9 million ADRs, equivalent to 17.79 million common shares, and has been reportedly oversubscribed more than seven times. Demand has come from a diverse group of institutional investors including global long-only funds, technology sector-focused funds, sovereign wealth funds, and Asia-focused global investors. Major financial institutions like Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co. are leading the offering. Baillie Gifford, Coatue Management, and Situational Awareness Partners have expressed interest in purchasing as much as $7 billion worth of ADRs.
This listing comes amidst recent volatility in the shares of SK Hynix and rivals like Micron Technology Inc., as the enthusiasm for artificial intelligence infrastructure has begun to temper. Despite a recent 25% drop from a record high in late June, SK Hynix shares are still more than triple their value from the beginning of the year. HSBC analysts believe a Nasdaq listing could boost SK Hynix's valuation by as much as 20% and help close its valuation gap with Micron, projecting its price-to-book ratio to increase from 2.8 to 3.4. Jim Cramer, however, expressed hope for a slight discount in pricing despite the oversubscription, to ensure a tight deal. The proceeds from this offering are earmarked for building new production facilities in South Korea and acquiring extreme ultraviolet (EUV) lithography scanners, critical for advanced semiconductor manufacturing. The ADRs are set to begin when-issued trading on Friday on the Nasdaq Global Select Market under the symbol SKHYV, which will change to SKHY for regular-way trading on July 13.
