SK Hynix, a South Korean chipmaker, has priced its American Depository Receipts (ADRs) at $149 per share, aiming to raise around $26.5 billion. This offering is poised to be the largest ever first-time share sale in the United States by a foreign company, surpassing Alibaba Group Holding Ltd.'s $25 billion debut. The decision to proceed with the offering comes despite recent volatility in the company's shares and those of rivals like Micron Technology Inc., as enthusiasm for artificial intelligence infrastructure bets has begun to cool. SK Hynix's common shares ended Thursday down 25% from a record high in late June, though they remain more than triple their value from the start of the year.
The sale of 177.9 million ADRs, representing 17.79 million common shares, was reportedly more than seven times oversubscribed, indicating strong investor appetite. The ADRs attracted demand from a diverse group of institutional investors, including global long-only funds, technology-focused funds, sovereign wealth funds, and Asia-focused global investors. Major financial institutions leading the offering include Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co., with nine other firms also participating. SK Hynix also secured indications of interest from Baillie Gifford, Coatue Management, and Situational Awareness Partners for up to $7 billion worth of ADRs.
The $149 per ADR price represents about a 3.1% premium over the Thursday closing price of SK Hynix's common shares in Seoul, which stood at 2.186 million won ($1,445) each. Each SK Hynix ADR is equivalent to one-tenth of a common share. The ADRs are scheduled 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 starting July 13. This capital raise will finance new factories and equipment to meet surging demand for artificial intelligence chips, leveraging SK Hynix's position as a leading supplier of high-bandwidth memory chips.
