South Korean chip-making giant SK Hynix's debut on Wall Street is set to be the largest share sale by a non-U.S. company after it raised $26.51 billion issuing American depositary receipts.
When its ADRs list on Friday, it will top the $25 billion raised by Chinese e-commerce giant Alibaba in 2014. It would also rank as the second biggest U.S. stock sale on record after SpaceX's $75 billion offering last month.
The company in a Korean exchange filing, late in New York time Thursday, said it plans to issue 177.9 million ADRs priced at $149 each, with 10 ADRs representing one common share.
The cash raised will go toward expanding its chip-making facilities and purchasing advanced equipment, according to the filing. The company's Seoul-listed stock has already more than tripled this year, boosted by insatiable global demand for chips related to the artificial intelligence boom.
Ten ADRs would cost $1,490, a premium of about 3% compared with Hynix's shares in Seoul, which ended Friday at 2,180,000 won, equivalent to $1,450.
High demand for Hynix's ADRs could send it higher when trade begins in New York, and they could initially trade at a 12%-17% premium to Seoul-listed shares before that premium narrows to about 10% in coming months, said Douglas Kim at Douglas Research Advisory on Smartkarma.
That premium is justified because some large institutional investors cannot easily buy South Korea-listed common shares and are required by their investment mandates to hold only U.S.-listed securities, Kim added.
"That is exactly the kind of story equity investors want to own into earnings season," said Tickmill Group's Patrick Munnelly.
Hynix in its exchange filing said funds could be used to purchase highly advanced equipment such as ASML's extreme ultraviolet scanners, which can cost hundreds of millions of dollars.
This story is not about "abstract AI enthusiasm, but capital raising, capacity expansion, data center demand, and hardware bottlenecks," he said.
Willingness to buy into Hynix and the Korean chip complex shows investors still view the AI boom as a structural story--not merely a momentum trade, he added.
Analysts say the U.S. listing will help SK Hynix narrow its valuation gap with U.S. rival Micron Technology and pave the way for the Korean memory-chip maker to join the Philadelphia Semiconductor Index, a U.S. chip benchmark tracked by global passive funds. This could prompt a re-rating of the stock.
(END) Dow Jones Newswires