Toshiba’s Former Memory Chip Unit Files for Japan IPO

Kioxia Holdings Corp., the memory chipmaker spun out of Toshiba Corp. in 2018, and its shareholders are seeking to raise 347 billion yen ($3.3 billion) in Japan’s biggest initial public offering of 2020.

The company said it’s filed for an initial public offering in Japan of 87.63 million new and existing shares, accelerating fundraising plans amid surging stock markets. It plans to sell them at an indicative price of 3,960 yen apiece at a valuation of about 2.1 trillion yen, according to Bloomberg calculations. Kioxia plans to finalize pricing in September before an Oct. 6 listing, and shareholders including Toshiba and major backer Bain Capital will be offering shares as part of the IPO.

Toshiba, a Japanese conglomerate founded in the 1800s, invented flash memory three decades ago, but suffered a series of missteps in recent years. The Japanese company had to sell the business to a group of investors led by Bain two years ago to pay for losses at its bankrupt nuclear power unit, although Toshiba retained a 40% stake. The deal announced Thursday comes with an over-allotment option of an additional 7.9 million shares, according to the filing.

The memory chip business has benefited this year as more people work from home and turn to games and online video during the coronavirus pandemic. Samsung Electronics Co. said in July it anticipates that new smartphones and game consoles will boost demand for the industry.

Kioxia is an invented word that combines the Japanese word for memory — kioku — and axia, the Greek term for value.

What Bloomberg Intelligence Says

Toshiba’s plan to list Kioxia Holdings in October, reported by Nikkei, may help placate activist shareholders, as management vows to pay out more than half the proceeds to investors. A potential 3 trillion yen valuation for the flash memory maker, as reported by media, represents a gain vs. the 2.3 trillion yen paid by a Bain-led consortium to Toshiba for a 60% Kioxia stake in 2018.

- Takeshi Kitaura and Ian Ma, analysts

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