SK Hynix US IPO Proposed to Be Priced at $149, Raising About $26.5 Billion; UBS Says There Is an Arbitrage Opportunity.

Tradingkey - SK Hynix (SKHY) has unveiled its pricing plan for its U.S. listing, proposing to issue ADRs at $149 per share, which corresponds to a total fundraising size of approximately $26.5 billion. If listed at this price, it is expected to break the long-standing record held by Alibaba and become the largest foreign enterprise IPO in U.S. history.

According to the filing submitted by SK Hynix to the U.S. Securities and Exchange Commission (SEC), each ADR unit is equivalent to one-tenth of a common share. The current pricing represents a slight premium of about 3% over its latest closing price on the Korean stock market.

Although the final plan is not yet set in stone, primary market demand has already demonstrated exceptional resilience. Previously, SK Hynix expected to issue 177.9 million ADR units, equivalent to 17.79 million common shares.

According to a Bloomberg report, this offering has been oversubscribed by more than 7 times, covering a diverse range of institutions including global long-only funds, technology-themed funds, and sovereign wealth funds. The indicated subscription interest from top-tier institutions alone approached $7 billion. The underwriting syndicate consists of nine major investment banks, including Bank of America, Citi, Goldman Sachs, and JPMorgan.

According to the schedule, SK Hynix ADRs will begin when-issued trading this Friday and officially debut for regular trading on Nasdaq on July 13 under the ticker SKHY. Upon completing its U.S. listing, the memory giant will secure ample capital to further boost capacity expansion and technology iteration for core products such as AI high-bandwidth memory.

UBS recently stated that investors should pay attention to potential arbitrage opportunities when SK Hynix transitions from its local listing line in South Korea to its secondary U.S.-listed ADR trading line. The firm's analyst team noted that inefficiencies in investment channels within the South Korean stock market could lead to a premium for its U.S. listing.

The firm explained that for investors such as hedge funds, these ADRs might be more attractive than South Korean shares due to higher holding efficiency and lower costs. Some global portfolio managers who do not hold its Seoul-listed shares may also be able to purchase these U.S. securities.