SK Hynix, the South Korean chipmaker, has priced its U.S. American Depositary Receipt (ADR) listing at $149 per share, with the goal of raising approximately $26.5 billion. This offering is set to become the largest foreign initial public offering (IPO) in U.S. history, surpassing Alibaba's previous record. The listing of these ADRs, which are equivalent to one-tenth of a common share, represents a slight premium of about 3% over its latest closing price on the Korean stock market.
The offering has seen exceptional demand, being oversubscribed by more than seven times. Interest has come from a diverse range of institutions, including global long-only funds, technology-themed funds, and sovereign wealth funds, with indicated subscription interest from top-tier institutions alone approaching $7 billion. This strong demand highlights the enduring appeal of ADRs for Asian firms seeking to attract U.S. investors and potentially boost valuations relative to their U.S.-traded counterparts.
Analysts, including those from UBS, have pointed out potential arbitrage opportunities for investors due to cross-market price inefficiencies between the U.S. and Seoul listings. For investors such as hedge funds and global portfolio managers who don't hold Seoul-listed shares, the U.S. ADRs offer improved holding efficiency and lower costs. The proceeds from this listing will be used to fund capacity expansion and continued development of core products like high-bandwidth memory (HBM), crucial for artificial intelligence (AI) infrastructure.
SK Hynix ADRs are scheduled to begin when-issued trading on Friday, July 11, and will officially debut for regular trading on Nasdaq on July 13 under the ticker SKHY. The underwriting syndicate for this significant offering includes nine major investment banks, such as Bank of America, Citi, Goldman Sachs, and JPMorgan. This move marks a significant milestone for SK Hynix, capping a period of dramatic success in the AI industry as a leading supplier of HBM.
