Kioxia Holdings Corp., backed by Bain Capital, priced its initial public offering (IPO) on Monday, valuing the memory-chip manufacturer at $5.2 billion. This significant transaction marks the continuation of a year of substantial deals in Tokyo and reinforces the strength of Japan’s IPO market.
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Kioxia’s IPO: The Third-Largest in Japan in 2024
The shares were priced at ¥1,455 ($9.7), the midpoint of the projected range. This IPO represents the third-largest in Japan this year, solidifying Kioxia’s position in the market. The world’s No. 3 NAND maker is going public amidst a surge in Japan’s IPO market, experiencing its highest volume since 2018. Bloomberg data reveals that Japanese companies are poised to raise approximately ¥930 billion this year through IPOs, following successful listings by Tokyo Metro Co. and Rigaku Holdings Corp.
A Resurgent Japanese IPO Market
Several factors contribute to Japan’s thriving IPO landscape. A concerted effort to enhance shareholder value, coupled with the end of deflation, has propelled stock prices to unprecedented heights. This favorable economic environment has created an opportune moment for companies like Kioxia to go public. Kioxia, slated to debut on the Tokyo Stock Exchange on December 18th, initially set a price range of ¥1,390 to ¥1,520 last week. The IPO establishes Kioxia’s market capitalization at ¥784 billion, with an offering size of ¥120 billion, including an overallotment option.
Overcoming Challenges and Capitalizing on Opportunities
A previous IPO attempt in October 2020 was postponed due to a prolonged slump in NAND prices, hindering Kioxia’s investment and expansion capabilities. This listing will provide Kioxia with the necessary capital to increase capacity and maintain competitiveness in the demanding memory industry. Bloomberg Intelligence analyst Masahiro Wakasugi suggests that Kioxia has the potential to achieve sales growth comparable to the industry average.
Large Listings Drive Momentum
Despite a decrease in the overall number of IPOs since 2014, the substantial capital raised by companies going public indicates a trend toward larger offerings. This trend is further fueled by private equity firms, such as Carlyle Group Inc. and MBK Partners Ltd., divesting their investments. Kuroda Group Co., backed by MBK, is scheduled to go public just a day before Kioxia’s debut.
Positive Outlook for Kioxia
Wakasugi highlights the potential for increased sales for NAND flash memory chip and solid-state drive manufacturers due to the growing demand from AI-server customers. Kioxia is well-positioned to benefit from this trend, leveraging its advanced NAND and SSD technologies. Kioxia’s successful IPO not only provides a significant capital infusion but also positions the company for continued growth in a dynamic and expanding market. The company’s strong technology and the favorable market conditions suggest a positive outlook for Kioxia’s future. This IPO reinforces the strength and resilience of Japan’s financial market and sets the stage for continued growth in the technology sector.
