SK Hynix Expects Double Returns on Investment in Japan's Kioxia... 'Successful'

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[Asia Economy Reporter Minwoo Lee] Kioxia, formerly the semiconductor division of Japan's Toshiba, is set to be listed on the Japanese stock market. SK Hynix, which invested in Kioxia as part of a consortium, is expected to achieve an investment return of up to twice the amount.

On the 30th, Samsung Securities forecast that since SK Hynix's investment is financial, excluding participation in Kioxia's management or strategic cooperation, it will yield successful results.

According to major foreign media such as The Wall Street Journal (WSJ), Kioxia plans to go public through the Tokyo Stock Exchange on October 6. It is expected to raise $3.3 billion (approximately 3.915 trillion KRW). Through this IPO, Kioxia plans to sell part of the shares held by major shareholders Bain Capital and Toshiba, and also issue 21.6 million new shares.

After conducting demand forecasting from the 18th to the 25th of next month, the public offering price will be decided on the 28th of the same month. The current desired public offering price is 3,960 yen per share. In this case, Kioxia's market capitalization will reach $20.1 billion. In 2018, SK Hynix, along with Bain Capital and others, formed a Korea-US-Japan consortium and acquired Kioxia for $18 billion. The current shareholding ratio is 49.9% for the Korea-US-Japan consortium, 40.2% for Toshiba, and 9.9% for Hoya.

Hwang Minseong, a researcher at Samsung Securities, analyzed, "When initially purchasing shares from Toshiba, the market estimated the total corporate value at 2 trillion yen, half of which was assets and half liabilities (borrowings of 600 billion yen + redeemable preferred shares of 416 billion yen)." He added, "Currently, multiplying the planned number of shares to be sold by the desired public offering price results in an asset value of 2 trillion yen, so SK Hynix can achieve twice the investment effect."

It is reported that SK Hynix invested about 4 trillion KRW. However, since the investment was made not simply for profit but to strengthen memory semiconductor technology, there is speculation that SK Hynix may not seek to recover the investment funds. On the other hand, there is also the possibility of recovering the investment funds and reinvesting them in SK Hynix's semiconductor business. Researcher Hwang predicted, "Recovered investment funds will be used for future investments to support SK Hynix's growth. For example, they could be used as resources to acquire Intel's NAND flash business."

Meanwhile, according to market research firm TrendForce, Samsung Electronics held the largest share of the global NAND flash market in the first quarter of this year with 33.3%. Kioxia was second with 19.0%, while SK Hynix ranked fifth with 10.7%.

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