SK Hynix ADR draws 7x demand from US institutions, set to be second-largest foreign IPO after Alibaba

SK Hynix's debut offering of American Depositary Receipts (ADRs) on the U.S. stock market has been met with substantial enthusiasm from institutional investors, with demand reportedly exceeding the offering size by sevenfold. This strong reception positions the offering as potentially the second-largest debut by a foreign company on U.S. exchanges, trailing only Alibaba's massive $25 billion IPO in 2014.

Sources familiar with the matter revealed that a diverse range of global investors, including long-term investment funds, specialized technology funds, sovereign wealth funds, and Asian investment-focused institutions, placed significant orders. Major players like Baillie Gifford, Kotyu Management, and Situational Awareness Partners have expressed interest in acquiring ADRs valued up to $7 billion. SK Hynix plans to issue 177.9 million ADRs, with each ADR representing one-tenth of a common share. The total offering size is estimated at approximately $24.5 billion.

This successful fundraising occurs amidst a recent cooling of the artificial intelligence (AI) semiconductor rally. SK Hynix's stock price had fallen 5.7% the previous day and is down about 30% from its late June peak, though still trading at roughly three times its value at the start of the year. Competitor Micron has also experienced stock volatility as AI investment fervor wanes. However, global institutional investors appear to be looking past the short-term fluctuations, recognizing the significant growth prospects in the AI memory market, especially for High Bandwidth Memory (HBM).

Bank of America (BofA), Citigroup, Goldman Sachs, and JPMorgan are serving as joint lead managers for the offering, with nine additional securities firms participating. SK Hynix ADRs are scheduled to commence conditional trading on the Nasdaq Global Select Market under the ticker symbol 'SKHYV' on August 10, transitioning to 'SKHY' for regular trading on August 13.