Lee Chan-jin, Chairman of the Financial Supervisory Service, stated his position that Solidigm, a U.S. grand-subsidiary of SK Hynix, falls under duplicate listing regarding its push for a NASDAQ listing. Observers also predict that since overseas listings do not undergo domestic exchange review, financial authorities will consider whether they can check shareholder protection through the securities registration statement submitted by SK Hynix. However, since an official interpretation from the Financial Services Commission is required even to determine whether it falls under securities registration statement review, controversy may arise over how far the authorities can intervene in overseas listings.
During the National Assembly's Political Affairs Committee's national audit of the Financial Supervisory Service on the 19th, Chairman Lee said, "Both the FSC and we have determined that it violates the (duplicate listing) guidelines," adding, "However, we are waiting for an official interpretation from the FSC regarding whether it falls under domestic securities registration statement (review)." He continued, "We will review in detail and take appropriate action to the extent possible," and added, "If possible, we will proceed so that concerns can be conveyed to SK Hynix in an appropriate manner."
With financial authorities having implemented guidelines prohibiting duplicate listings in principle while allowing exceptions since last August, it is assessed that they interpreted Solidigm as potentially falling under duplicate listing in principle if it actually pushes for a NASDAQ listing.
Financial authorities stipulate that cases where a domestic parent company lists its subsidiary overseas also fall under the scope of the principle prohibiting duplicate listings. When a domestic company lists its subsidiary domestically, it undergoes Korea Exchange's duplicate listing review, but such review is impossible when listing on an overseas exchange, so they have set a policy to check through the securities registration statement submitted by the parent company. At the time of the guidelines' announcement, a financial authority official explained, "Even if a domestic corporation issues securities overseas, it must submit a securities registration statement to the Financial Supervisory Service if there is a possibility of repatriation to Korea within one year," and added, "We will examine (the five major duties of shareholder loyalty, etc.) during the process of accepting the securities registration statement."
According to business circles and foreign media, Solidigm has selected Goldman Sachs and Morgan Stanley as lead underwriters for its IPO (initial public offering) and is reportedly considering a listing next year. Solidigm is a company established in the U.S. after SK Hynix acquired Intel's NAND flash and SSD (Solid State Drive) businesses for $9 billion, accounting for approximately 9% of SK Hynix's total revenue. If Solidigm raises its own funds through a NASDAQ listing, it can alleviate SK Hynix's financial burden.
SK Hynix maintains that there is no confirmed matter regarding the possibility of Solidigm's U.S. NASDAQ listing. Previously, SK Hynix stated, "We will take long-term corporate valuation and shareholder value enhancement as the most important criteria for judgment, regardless of the plan."
SK Hynix maintains that there is no confirmed matter regarding whether it will list. It explained that with expanding AI (artificial intelligence) infrastructure investment increasing demand for eSSD (enterprise Solid State Drive), funding is needed to expand Solidigm's production capacity and secure technological competitiveness, so they are considering various options such as using their own funds and external capital. SK Hynix previously stated, "We will take long-term corporate valuation and shareholder value enhancement as the most important criteria for judgment, regardless of the plan."
Market views are divided. SK Hynix shareholders are concerned about corporate valuation discounts due to duplicate listing and the reduction of existing shareholders' interests. On the other hand, there is also an expectation that if a high corporate valuation is recognized during the listing process and the raised funds are used for growth, the absolute value of the shares held by SK Hynix could increase even if its ownership ratio decreases.
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