Kioxia Holdings Corp. plans to raise ¥378 billion ($3.6 billion) on October 6 through an initial public offering (IPO) on the Tokyo Stock exchange. The listing will be the largest market debut by a Japanese-based company this year. The firm will price its shares at ¥3,960 ($37.41), which indicates its market value is ¥2.13 trillion ($20.1 billion.)
Bain Capital, which heads a consortium that owns most of Kioxia, is orchestrating the firm’s initial offering.
A Long-Planning IPO
At present, Kioxia ranks as the world’s second-largest manufacturer of flash memory products. However, the firm’s path to becoming a publicly-traded company has been challenging despite its large global footprint.
The semiconductor company began its life as Toshiba Memory Holdings, a successful semiconductor subsidiary of the Toshiba Corporation. However, the electronics giant hastily sold the segment in 2018 amid the collapse of its nuclear power plant construction business. Bain, and a group of investors including SK Hynix, bought a controlling interest in the firm for ¥2 trillion ($18.8 billion) and rebranded it as Kioxia late last year.
The investment group intended to bring the chipmaker public in 2019, but decided against it due to adverse market conditions. This year, the coronavirus pandemic created strong worldwide demand from memory components, thus making Kioxia more appealing to investors. But the viral outbreak also destabilized the Japanese economy, which threatened Bain’s plans for a blockbuster 2020 initial offering.
Thankfully, the Japanese Stock Price Index quickly recovered from the coronavirus shockwave, and Kioxia will finally go public this fall.
A Bright Future
Following its public listing, Kioxia looks to have a bright future ahead.
Market analysts anticipate its IPO will be well received, and Bain has prepared an overallotment in case market interest exceeds its forecast. As such, the firm will exit the year with lots of fresh capital right as its industry enters a predicted expansion phase.
ResearchandMarkets recently published a study noting the global memory market will grow by 7.6 percent annually through 2026. The group states the development of new electronic devices, the 5G deployment, and vehicle digitization will create unprecedented demand for memory chips.
If Kioxia uses its new funding wisely, it could take advantage of the memory market expansion. Electronics manufacturers always need cutting-edge flash chips for their latest high-end offerings. Provided the company acquires state-of-the-art design and production tools in the near-term, its next-generation products could meet that requirement.
Though Kioxia’s leadership intended to launch its IPO much earlier, the firm is going public at the perfect time.