Kioxia Holdings Corp. (Kioxia), formerly known as Toshiba Memory, announced on Thursday, August 27, 2020, that it has filed for an initial public offering (IPO) worth up to $3.6 billion, which would be listed in the Tokyo Stock Exchange (TSE) on October 6 this year. Experts claim that the listing would be Japan’s biggest IPO for this year with the backing from the existing investors led by US private equity firm, Bain Capital LP (Bain). The globally leading financial giants such as Morgan Stanley, Goldman Sachs, JPMorgan, and Nomura are the major coordinators for the Kioxia’s IPO filing.
The chipmaker has officially changed its name from Toshiba Memory Corp. to Kioxia Corp. with effective from October 1, 2019. Kioxia was the former chip-making unit of a leading Japanese tech company, Toshiba Corp. (Toshiba), and they got separated in 2018 after the latter company was facing financial difficulties related to the failure of its United States (US) nuclear power unit.
In the regulatory filing showed on Thursday, Kioxia’s IPO would offer 95.5 million shares including an overallotment in the event of exceptional demand. The filing further mentioned that the chipmaker sets its indicative price of 3,960 yen per share and offers a limit of up to 378 billion yen ($3.6 billion) in shares. Upon the completion of the IPO deal, the company is expected to have a market value of 2.13 trillion yen ($20.1 billion).
The chipmaker was bought by a consortium led by Bain and South Korean chipmaker SK Hynix Inc. for 2 trillion yen in 2018 when Toshiba sold it to raise cash as a part of a restructuring. Bain revealed that it initially had planned to go IPO for Kioxia last year but had to cancel it since the global market conditions were deteriorating and uncertain. The chip supplier reported that it had recorded an operating loss of 173.1 billion yen for the fiscal year ended March 2020, in contrast to 45.9 billion yen profit earned last year.
Dropping Shares of the Existing Investors
As per regulatory officials, TSE has approved the IPO listing filed by Kioxia, and the process for the book-building to determine the demands of shares from investors would be taking place from September 18 to 25, with finalizing the offer price on September 28. Experts suggested that the listing is expected to boost Kioxia’s future investment and give a better competition with rivals including South Korea’s Samsung Electronics Co. in the highly volatile flash memory market.
Toshiba, having a 40.6% share in its former chip maker, said that it planned to sell 30 million of its shares and reduce the current stake to 32% on the same day of the IPO commencement. Similarly, Bain also stated that it would reduce its current share from 56.2% to 47.8% after the IPO.
Investors are now taking cautions because of the uncertainties of the global market conditions amid the coronavirus outbreak. However, analysts project a strong demand for the flash memory chip due to its growing requirements from cloud service providers and data center analysts associated with operations for artificial intelligence, autonomous driving, and the Internet of Things.