Chinese chipmaker CXMT Corp's $8.6 billion initial public offering was more than 500 times oversubscribed by institutional investors, according to a Sunday filing. While this indicates solid demand, it was notably smaller than the oversubscription ratios seen in recent STAR Market IPOs. For example, institutional investors, including mutual funds, pension funds, and insurers, subscribed for a total of 1.24 trillion shares, against 2.17 billion shares offered to them.
This somewhat tempered demand comes amid a global sell-off in chip stocks, with the STAR Market, home to many leading chip companies, plunging approximately 25% from its July 1 peak, wiping out over 4 trillion yuan ($590.32 billion) in market value. The retail portion of CXMT's IPO also showed less investor fervor, being 243.93 times oversubscribed. CXMT is the world's fourth-biggest DRAM chipmaker after Samsung, SK Hynix, and Micron Technology, and its IPO is Asia's largest so far this year.
The initial public offering sought to raise about 57.9 billion yuan ($8.55 billion) before any over-allotment options, with the price set at 8.66 yuan per share. If the over-allotment option is fully exercised, gross proceeds could increase to about 66.6 billion yuan. The company plans to use the proceeds to upgrade production lines and technologies. This mega IPO comes at a time of rising volatility in global memory-chip shares, and while some analysts believe it won't drain market liquidity, it could weigh on China's stock market liquidity as the tech share surge loses steam.
Analysts noted that despite the significant oversubscription, the institutional demand fell short of the exceptional levels seen in other recent Chinese technology listings. The success of CXMT's market debut is expected to influence sentiment for future major technology listings in China, serving as an important indicator of investor appetite amidst fluctuating global semiconductor valuations and a more selective investment environment.
