Kioxia Goes Public, Shares Rise 4% on Debut

Kioxia Holdings, the Japanese memory chip giant, made its debut on the Tokyo Stock Exchange on Wednesday, December 18, with shares priced at ¥1,440, a slight 0.3% drop from the IPO price of ¥1,445. However, the stock saw an immediate surge, rising to ¥1,504, reflecting a 4% increase over the initial offering price.

At the offering price of ¥1,445, Kioxia was valued at approximately ¥784 billion (US$5.1 billion). This initial public offering (IPO) marks a significant milestone for Kioxia, signaling the next chapter in the company's transformation since its separation from Toshiba. In 2018, Kioxia, then known as Toshiba Memory, was acquired by a consortium led by Bain Capital and including SK hynix, in a deal worth $18 billion, which at the time was Asia's largest private equity transaction.

Six and a half years after the acquisition, Bain Capital continues to guide Kioxia's evolution into a leading force in the memory industry.

Ahead of the IPO, Kioxia unveiled plans to invest ¥729 billion (approximately US$4.8 billion) to increase the production of its cutting-edge 218-layer NAND flash memory chips. This investment effort is part of a broader financing initiative, which also includes a credit line from Japan's largest banks and a ¥243 billion subsidy from the Japanese government. Kioxia is collaborating with its U.S. partner, Western Digital, on this project.

Despite the growth prospects, the memory market has faced challenges. Since late 2022, the market has experienced a downturn, leading to Kioxia posting losses for five consecutive quarters by December 2023, which in turn caused a slowdown in investments. As a result, Kioxia's position in the flash memory market dropped to third place, trailing behind Samsung Electronics and SK hynix.

Initially, Bain Capital had planned to take Kioxia public within three years of the acquisition, targeting an IPO in October 2020. However, the U.S. export restrictions on Kioxia's key customers forced the company to revise its business plans and delay the IPO.

Post-IPO, the Bain Capital-led consortium reduced its stake in Kioxia from 56% to 52%, while Toshiba's holding dropped from 41% to 32%. In 2023, Kioxia also engaged in discussions with Western Digital regarding a potential merger of their flash memory businesses. However, the plan was ultimately abandoned due to opposition from SK hynix, a major shareholder in Kioxia.

SK hynix holds convertible debt in Kioxia, which could potentially convert into equity, allowing the South Korean company to acquire up to 14% of Kioxia's shares.