SK Hynix has decided to launch an SPO in the U.S. of up to $14 billion. Why aren't investors happy?

South Korea's SK Hynix, a leading supplier of memory chips for Nvidia's AI chips, has filed for a secondary offering in the US. The listing could be one of the biggest on Wall Street in recent years. Minority shareholders have demanded that SK Hynix do without issuing new securities, fearing dilution of their stakes due to the secondary issue.

SK Hynix on March 25 said it has filed an application for a secondary stock listing (SPO) in the United States, scheduled for the second half of 2026, Reuters reports. The SPO filing is in confidential form, allowing the company to keep the terms of the offering undisclosed until almost the date of going public. "While we aim to complete the listing during 2026, specific details - such as the size, structure and timing of the offering - have not yet been finalized," the agency quoted SK Hynix as saying in a statement.

The company plans to float 2-3% of the total number of securities on the stock exchange in New York and expects to use the proceeds from their sale to finance the construction of chip plants in the South Korean city of Yongyin and the U.S. state of Indiana, a source told Reuters. Based on the market capitalization of SK Hynix, a 2-3% stake in the company is worth from $9.6 billion to $14.4 billion. This placement may become the largest in the U.S. in the last five years, more than double the U.S. IPO Coupang ($4.6 billion) in 2021, the agency states.

Earlier this week, The Korea Economic Daily reported that SK Hynix is considering raising 10 trillion to 15 trillion won ($6.7 billion to $10 billion) by issuing new shares under a U.S. listing.

SK Hynix shares jumped 5.7 percent shortly after the opening of trading on March 25 in Seoul, but squandered nearly all of the gains by the end of the trading day. The Korea Corporate Governance Forum, a group of investors and lawyers, on Wednesday opposed the issuance of additional SK Hynix shares for a U.S. listing, fearing dilution of existing shareholders' stakes. The organization said the company's projected excess cash flow can fully cover its investment and R&D program in 2026-2028, and urged SK Hynix to buy back 10-15% of its shares from the market to use most of them for the U.S. SPO.

"The decision was disappointing. I don't see why they need to issue new shares - they are perfectly capable of listing using existing paper instead. If they do a buyback and then list in the U.S., it will make everyone happy," Kim Hyun-soo, a portfolio manager at Seoul-based IBK Asset Management, told Reuters in a statement.

Over the past year, SK Hynix shares have risen 365% thanks to a boom in the construction of data centers for neural networks, which triggered a jump in demand for memory chips. According to FactSet, 40 out of 44 analysts recommend securities of the South Korean company to buy with a consensus rating of Buy. The average target price of 1.4 million won per unit ($915), calculated by the service, implies a 38% growth in quotes over the next year.

This article was AI-translated and verified by a human editor