Historic change in Japanese stock market rules gave Bain Capital the opportunity to relaunch the initial public offering of Kioxia, Toshiba’s former memory chip manufacturing unit, after a listing was suspended in the middle trade tensions between the United States and China.
The Tokyo Stock Exchange’s rule change would allow the private equity firm to sell a 10% stake in the chipmaker to investors before the current window closes in February, people familiar with the plans said. Kioxia listing.
Bain is considering ways to take advantage of the new rule, say people familiar with his thinking. The more limited scale of the listing would increase significantly less than initially expected, but bankers believe this should allow for a faster book-building process.
If the February deadline is not met, the IPO which was initially expected to raise around $ 3.6 billion and which would have been the largest in Japan in 2020 could be postponed until the end of 2021, while Kioxia will resubmit its enrollment request using new numbers from the fiscal year ending in March.
Kioxia was shut out of Toshiba in 2018 after the Japanese tech conglomerate was pushed to the brink of bankruptcy by the collapse of its nuclear business in the United States. The possible $ 18 billion sale of the chip unit to a consortium led by Bain has left Toshiba with a 40% stake in what was once its crown jewel.
The new rule states that for larger public offerings, only 10 percent of the company’s total stock must be tradable on the date of listing. The previous minimum, in effect when Kioxia’s IPO was postponed three months ago, was 35 percent.
The new provision affects companies that plan to register on the prestigious first section of the TSE and requires them to commit to raising the ratio of marketable shares to 35 percent within five years.
Kioxia declined to comment on its plans to go public.
The listing was abruptly withdrawn at the end of September the day it was due to the price, as the growing uncertainty caused by the trade dispute between the United States and China sent shock waves through the tech sector and fueled the worries that Bain would not be able to get the assessment he sought.
Kioxia, the world’s second-largest producer of NAND flash memory chips, had hoped in August to price the offer at ¥ 3,960 ($ 38) a share, but then lowered the range to ¥ 2,800 – ¥ 3,500.
The decision to postpone the IPO came shortly after the U.S. government implemented sanctions against Semiconductor Manufacturing International Corporation, China’s largest chipmaker, after cutting telecommunications group Huawei from suppliers of American chips.
The new push for an IPO coincides with better prospects on the U.S.-China front after Washington granted Kioxia special permission to export chips to Huawei, according to people close to the company. Kioxia generates less than 10% of its annual revenue from Huawei.
Nonetheless, geopolitical concerns remain significant, people familiar with Kioxia’s listing plans have said, as do uncertainties over whether the administration of US President-elect Joe Biden will seek to defuse tensions with Beijing.