Japanese Chipmaker Kioxia Shares Surge by 14% on Market Debut
Stocks of Japanese chipmaker Kioxia surged by 14% on the first day of market trading. Kioxia’s shares surge pushed the company’s valuation to over $5.8 billion. According to Reuters, the surge highlighted growing investor demand for the company’s shares.
Kioxia Shares Rise
Earlier this year, Kioxia raised 120 billion yen through an initial public offering (IPO). The company priced the IPO at 1,455 yen per share. Trading of the Kioxia shares commenced at 1,440 yen per share, below that offer price. The shares hit a high of 1,689 yen, closing the first day of trading at 1,601 yen.
“The market appears to have reacted well to the valuation discount being offered. There doesn’t appear to be any urgent selling. Today’s performance bodes well for future private equity exits in Japan providing valuation is reasonable,” Pictet Asset Management Hedge Fund Manager, Jon Withaar said.
Kioxia IPO was the third largest this year. The company’s leadership was impressed by the public listing.
“I’m relieved to see we’ve made it to the listing,” Kioxia CEO Nobuo Hayasaka said.
Formerly known as Toshiba Memory, the company is a leading manufacturer of memory chips. The company was acquired by a Bain-led consortium in 2018 for 2 trillion from Toshiba following a lengthy, contentious battle. Toshiba put its memory chip business up for sale after it experienced a crisis following cost overruns in its nuclear unit.
A Tough Path
Kioxia’s path to the IPO was extremely tough. The Bain consortium Kioxia deal marked a significant milestone intervention in private equity. Since the acquisition, uncertainty has persisted. Bain postponed Kioxia’s IPO plans two years later as concerns about the state of the global Kioxia AI chip market rose between the US and China.
A move to merge Kioxia with Western Digital, which initially challenged the chipmaker’s sale to the Bain consortium, failed due to reservations from one of its investors- for SK Hynix. In October 2024, Bain Capital canceled plans for Kioxia’s IPO after investors dropped the chip maker’s valuation to almost 50% of the 1.5 trillion it was seeking.
Bain’s shareholding in Kioxia is expected to drop to 50.7% following the IP. Internal sources say the company opted to offload a portion of its shareholding in Kioxia as a result of the chipmaker’s market value.
Kioxia’s shares debuted at a year when Japan’s stock market experienced a surge in IPOs. In 2024, Japan IPOs raised more than $6 billion. Although the number of IPOs was the lowest in about a decade, this marked the best year for the country since 2021.
Increased Scrutiny
Although going public expands Kioxia’s investment options in the capital intensive chip manufacturing industry, it increases the company’s financial scrutiny. In the quarter ending September 30, the chip maker reported a net revenue of 106 billion yen, up from 69.8 billion yen the previous quarter. Even so, analysts have raised concerns over the company’s ability to compete in the memory chip market.
“The mooted valuation is 4-5 times price/sales which may represent some scarcity value in the Japanese market for semiconductor stocks, but might be hard to justify otherwise,” Comgest Portfolio Manager Richard Kaye said.
Kioxia says that its listing will not lead to significant changes to the decision making structure where the Japanese chipmake consults Bain in investment decisions. Its listing will also not affect its relationship with Western Digital.
