KDIC raises $113 million from clean-up sale in SK Hynix

The block trade comes following the tech company’s earnings announcement and after gains in Asian markets yesterday. It prices at a 1% discount to the latest close.
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KDIC Building in Seoul
<div style="text-align: left;"> KDIC Building in Seoul </div>

Korea Deposit Insurance Corp (KDIC) has sold its entire remaining stake in SK Hynix, one of the world’s major semiconductor suppliers, raising W126.1 billion ($113 million). The deal fixed the price just below the mid-point of the indicative range for a tight 1% discount.

Block trade activity in Asia has been quiet in recent weeks, as volatility accelerated in the global markets due to investor concerns about the health of the world’s economy.

But last night turned out to be opportune timing for the share sale in Hynix. The Korean tech company’s stock rose after it reported solid earnings results earlier in the day, and the Asian markets also recouped some ground yesterday following a rally on Wall Street overnight. The books for the deal opened at around 3pm in Hong Kong and closed in about two hours.

It drew strong response, and the book was multiple-times covered, a source said, adding that about 70 accounts participated in the deal, both international and domestic investors.

Hynix is a leading global semiconductor supplier, while KDIC is an integrated deposit insurer. It is responsible for insuring bank deposits and also holds stakes in various Korean banks and financial institutions on behalf of the government that were taken over as part of the restructuring of the financial sector that took place after the Asian financial crisis.

Earlier yesterday, Hynix announced its first quarter earnings results to March. It reported a 2% rise in revenue at W2.8 trillion for the period from the previous quarter, citing an upward demand of PC and server DRAM. Its net income climbed 9% to W179 billion for the quarter. After the earnings announcement, the company’s stock ended yesterday’s trading up 0.9% at W29,100.

KDIC, through its wholly owned subsidiary KR&C Co, sold 4.38 million shares, or 0.6% of the memory chip maker, at W28,800 each, raising $113 million. The offer price translated into a 1% discount to yesterday’s close.

The deal was marketed in a price ranging between W28,550 and W29,100, which represented a zero discount to a 1.9% discount, and indicated a deal size of between $112 million and $114 million.

These are the stakes that the government has held for a long time, and the latest deal was just part of the sell-down plan of the government holding, the source said. The previous share sale by the government in the company was in June 2010.

Hynix’s stock has gained about 23% from a low in early February, and it is up 13% year-to-date. By comparison, the Kospi Index also rose 0.9% yesterday, but it is down 3.1% so far this year.

Goldman Sachs and Samsung Securities were joint bookrunners for the block sale.

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