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Investment bankers working on the SK Hynix listing are in line for a nine-figure payday, with the trillion-dollar Korean chipmaker’s US market debut set to be one of the largest public offerings in history.
The fee pool for the banks underwriting the share sale on the Nasdaq, including Goldman Sachs and Citi, may end up totalling more than $140mn, made up of 0.5 per cent of funds raised and a discretionary incentive fee paid out by the company, according to two people familiar with the deal.
Bank of America, Citi, Goldman and JPMorgan are the lead underwriters for the Korean chipmaker’s secondary listing on the Nasdaq, which is expected to raise around $28bn, according to the prospectus. SK Hynix starts trading in New York on Friday.
The Nasdaq initial public offering for the South Korean group comes as the building of AI data centres drives rocketing demand for memory chips, which has helped propel SK Hynix into the elite club of publicly listed companies with a market cap above $1tn.
If the $28bn target is hit it would compete with Saudi Aramco’s initial public offering in 2019, which raised around $29bn.
The final amount raised could be lower as SK Hynix’s share price has slipped slightly since the prospectus was published on Monday, though its market capitalisation has held just above the $1tn mark.
The only bigger public offering is SpaceX, which raised $85.6bn when it listed last month.
A number of other investment banks including Cantor Fitzgerald, Mizuho and Stifel are also involved in the share sale in more junior roles.
A payout of $140mn would make the Nasdaq listing one of the largest money spinners for Wall Street from an Asian company, alongside Alibaba’s $25bn IPO in 2014, which had a fee pool of $300mn, according to figures compiled by Dealogic.
US-based SpaceX’s mammoth offering in June resulted in a fee pool for Wall Street’s underwriters of more than $500mn, with an underwriting fee of 0.67 per cent.
The size of the deal and the fact SK Hynix is already listed on the Korea Stock Exchange likely contributed to the relatively low underwriting fee of 0.5 per cent.
SK Hynix along with all four lead underwriter banks declined to comment.
Unlike in some listings, there is no ‘greenshoe’ option for the SK Hynix listing that would allow underwriters an overallotment option to place additional shares, so the underwriting fee is unlikely to rise significantly.
Cornerstone investors including Leopold Aschenbrenner’s Situational Awareness and Baillie Gifford indicated they would buy $7bn out of roughly $28bn of the listing.
Citi is in line for an additional payday from its role as SK Hynix’s ‘depositary bank’. The US bank is managing the American Depositary Shares (ADSs) sold by SK Hynix. Citi will benefit from revenues from converting between ADSs and Seoul-listed shares as well as distributing dividends to holders of the shares.
