Kioxia Debuts with a 10% Surge Following $800 Million IPO
Investing.com -- Japanese chip manufacturer Kioxia Holdings closed at 1,601 yen, marking a 10% increase in its shares during its initial public offering (IPO). This rise in shares is attributed to strong investor interest in chip manufacturers, benefiting from the current artificial intelligence boom. The company's market value has now reached 863 billion yen or $5.62 billion.
As part of the IPO, Kioxia issued new shares while its two largest shareholders, Bain Capital and Toshiba Corp., sold a portion of their stakes. The Bain Capital-backed company produces NAND flash memory chips used in smartphones, computer servers, and other devices. Kioxia anticipates growth in the flash memory market driven by increasing demand for artificial intelligence applications and data centers.
The company has a manufacturing partnership with San Jose, California-based Western Digital, which produces solid-state drives, NAND chips, and hard disk drives. Despite the profitability of chip manufacturing during technology booms, Kioxia acknowledges its vulnerability to downturns. The company expects a decline in revenue and net profit for the quarter ending in December compared to the previous three months.
For the first half ending in September, Kioxia reported a net profit of 176 billion yen, recovering from a loss in the same period last year. This recovery was accompanied by an 85% increase in revenue, reaching 909 billion yen. However, for the fiscal year ending in March, the company experienced an increase in net loss alongside a decline in revenues.
In its IPO, Kioxia offered a total of 82.7 million shares, including 21.6 million newly issued shares. Kioxia stated on Wednesday that it would continue to encourage its major shareholders to reduce their stakes to meet a requirement of at least 35% or higher public float within five years; this represents a significant increase from the current level of 28%.
During the listing, Toshiba held a 32% stake, while the Japanese company Hoya had a 3.0% ownership. Kioxia indicated that it could control Bain Capital if its rival SK Hynix decides to convert its bonds into shares of Kioxia. As of Wednesday, Bain Capital held a 14% stake.