SK hynix considers lower Wall Street fees for ADR listing

SK hynix is considering paying its underwriters about 0.5 percent of the proceeds from its U.S. listing, a fee rate below Wall Street norms that could still hand the banks nearly 200 billion won ($130.8 million) given the sheer size of the deal, Bloomberg reported Saturday.

"SK Hynix Inc. is considering paying about 0.5 percent of the proceeds from its U.S. listing — one of the largest share sales ever — to banks working on the deal, according to people familiar with the matter," Bloomberg reported. "Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading the share sale."

The proposed rate is lower than the 0.67 percent SpaceX paid on its recent initial public offering (IPO), the largest ever. The discount reflects the chipmaker's standing, as SK hynix has traded on the Korean market for decades and ranks among the most closely watched technology stocks in the world, leaving underwriters with a relatively light burden in marketing the shares.

On top of the base fee, a discretionary incentive payment is also under discussion, according to sources that Bloomberg cited. The sources added that final terms could change.

Based on SK hynix's recent market capitalization, Bloomberg estimated the offering of American depositary receipts, also know as ADRs, could raise about $26.5 billion, putting total fees at around $130 million and making it one of the deals delivering the largest payouts to underwriters among Asia-related transactions this year.

The listing ranks among the biggest share sales on record, comparable to Saudi Aramco's $29.4 billion IPO in 2019 and trailing only SpaceX's roughly $86 billion offering. SK hynix has disclosed plans to issue ADRs backed by up to 2.5 percent of its outstanding shares, with a ceiling of 45.45 trillion won. Bookbuilding with foreign institutional investors begins Monday, the final price is to be set Thursday, and the shares are scheduled to start trading on the Nasdaq on Friday.

BY KIM MIN-YOUNG [[email protected]]