Market AnalysisJun 27, 20262 Min
SK Hynix’s $29-billion US listing may become the largest ADR issue ever
ADR refers to the American Depository Receipt. Depositary receipts are bank-issued securities that represent shares in a foreign company, allowing investors to trade them on local exchanges, in this case, Nasdaq.
SK Hynix on Wednesday filed with the US Securities and Exchange Commission (SEC) to raise approximately $29.65 billion through an ADR issue.
The company plans to issue 17.79 million new shares at a value of 45.45 trillion won, or $29.65 billion. If the share sale is completed at the indicated price range, the deal would surpass the $21.8 billion that China’s Alibaba raised in its 2014 US market debut.
What investors should know about the SK Hynix ADR
As per the details in the filing, each common share of SK Hynix will be represented by 10 ADRs. The stock’s closing price on Tuesday of 2.555 million won per share will serve as the basis for an initial range, with final pricing set after the bookbuilding process.
SK Hynix said it expects to start trading on Nasdaq on July 10. However, it added that the dates were tentative and subject to change.
BofA Securities, Citigroup Global Markets, Goldman Sachs and JP Morgan Securities are managing the offer.
How will the SK Hynix ADR benefit investors
After the announcement of the ADR, shares of SK Hynix surged more than 12% on Thursday on the South Korean stock exchange.
The sentiment around the stock was extremely positive as the company was confident that the ADR listing would expand its investor base.
Ryu Young-ho, a senior analyst at NH Investment & Securities, said that the most attractive benefit for investors is that SK Hynix will trade on Nasdaq alongside rival Micron, giving the company an opportunity to be re-rated in the US market.
“We expect to elevate our status as a global company by broadening our touchpoints in the United States, the epicenter of AI technological innovation,” the company’s filing read.
This momentum could also reflect in the company’s Korea-listed shares as investors increasingly link the valuations of securities trading in both countries.
How will SK Hynix use the ADR funds
SK Hynix has maintained that capital raising is intended to meet growing investment demand driven by the expansion of artificial intelligence (AI) infrastructure.
As for this particular ADR, SK Hynix has announced that the funds raised will go towards expanding fabrication capacity on the Korean peninsula and acquiring manufacturing equipment.
This will support investments for expanding production of high bandwidth memory (HBM) and next-generation AI memory products, while strengthening financial stability of the company.
Notably, SK Hynix is a key supplier of HBM chips used in AI systems by companies like Nvidia and Google. This week, the company overtook Samsung to become South Korea’s most valuable firm.
