As Japan’s semiconductor market faces uncertainty and fierce competition, Bain Capital slashes Kioxia’s IPO valuation nearly in half, scrapping October plans amid investor concerns.
US-based investment company Bain Capital has been compelled by investors to nearly cut in half its desired valuation for Japan’s Kioxia in an IPO, prompting the buyout firm to abandon plans for an October listing, according to a report by the Economic Times.
Known initially as Toshiba Memory, Kioxia was acquired from Toshiba by a Bain-led consortium in 2018 for 2 trillion yen ($13.4 billion). Last month, Reuters reported that the company scrapped its October IPO plans following investor demands.
The shift in strategy arose after global investors sought a market valuation of about 800 billion yen for Kioxia, significantly lower than Bain’s target of 1.5 trillion yen.
The difference in valuations has made it harder for Bain Capital to exit its six-year investment in Kioxia, highlighting investor worries about the memory chip market’s stability. Details about investor valuation expectations from the August and September meetings have not been disclosed.
A fund manager from an Asian hedge fund who met with Kioxia remarked that an IPO this year seemed unlikely due to the current NAND market conditions. However, referring to the type of memory chips Kioxia specialises in, it might be possible by the end of the financial year.
Kioxia has faced significant challenges, including its separation from the troubled Toshiba and halted merger talks with Western Digital due to opposition from investor SK Hynix. The memory chip sector has suffered from weak demand for smartphones and PCs, with Kioxia facing fierce competition from South Korean and U.S. manufacturers.
Although NAND prices have improved this year due to the rise of artificial intelligence, they have since plateaued. Kioxia pioneered NAND flash memory in the 1980s, which contrasts with SK Hynix, which also produces DRAM chips and currently benefits from the demand for high-bandwidth memory used in AI applications.
ET reported that the sources chose to remain anonymous due to the confidential nature of the information. Bain declined to comment, and Kioxia did not respond to requests for comment.
The Japanese stock market is volatile after a surprise rate hike and a new Prime Minister, with the benchmark index up 18% this year. Kioxia’s attempted listing is being watched as a gauge for buyout firms in Japan.
Additionally, the Japanese government is supporting Kioxia with subsidies of up to 242.9 billion yen to enhance production, owing to its role in AI memory chip supply. Experts suggested that an initial lower IPO valuation could help reveal Kioxia’s actual market value over time.
