A $26.5 billion IPO and nine-figure underwriting fees—SK hynix has Wall Street making a killing

Korean chip giant SK hynix has listed on Nasdaq, bringing a rare underwriting feast to Wall Street.

This global leader in high-bandwidth memory (HBM) chip manufacturing officially began trading on Nasdaq this Friday. The amount raised in this listing is as high as $26.5 billion, placing it among the largest initial public offerings in history. As reported by the UK’s Financial Times on Friday, the total fees the banks responsible for underwriting this stock offering could reach a nine-figure sum, making it one of Wall Street’s most lucrative earnings from Asian company listings.

Bank of America, Citi, Goldman Sachs, and JPMorgan Chase serve as the joint lead underwriters for this secondary listing. According to two people familiar with the matter, the fee structure consists of a fixed underwriting fee of 0.5% plus a freely discretionary incentive fee. Based on the $26.5 billion fundraising size, the fixed fee alone is already more than $130 million.

This listing not only brings substantial gains to Wall Street bankers, but also reflects that an AI-driven surge in memory chip demand is firmly focusing capital markets on this sector.

One of the largest listings in history, on par with Alibaba

SK hynix’s $26.5 billion Nasdaq fundraising is so large that it ranks among the few in the global IPO history. The Financial Times compares it with Alibaba’s $25 billion IPO in 2014—then, Wall Street delivered an about $300 million fee pool, one of the highest cases of Wall Street benefiting from Asian company listings to date.

The fee structure for SK hynix’s listing combines a fixed percentage and an incentive fee, and the final total is also expected to reach a nine-figure order of magnitude, making this deal one of the most high-value underwriting projects for Wall Street in recent years.

SK hynix is a leading player in high-bandwidth memory (HBM) chips globally, and HBM is an indispensable core component of today’s AI computing infrastructure. AI’s near-infinite demand for advanced memory chips has pushed the valuations of SK hynix, Samsung, and Micron—three global players—above $1 trillion this year.

SK hynix’s share price on the Korea Composite Stock Price Index (Kospi) has risen by more than 600% over the past year, showing how hot the market is. A hedge fund manager said bluntly: "Everyone owns it. If the cycle is about to end, we’re done. But if supply and demand stay as they are, we will earn back the entire market capitalization within the next two years."

Institutional investors rush to get in, with single-lot intent subscriptions of $7 billion

The offering attracted a large number of institutional investors rushing in. Investment firms Situational Awareness, Baillie Gifford, and Coatue said the three together may subscribe for as much as $7 billion of SK hynix’s American depositary shares (ADS) planned for issuance on Nasdaq.

A hedge fund executive said: "Over the past three or four years, there have been wave after wave of small surges in the AI space. We’ve seen different companies show revenue and demand of this scale at different stages." This trend also corroborates the hedge funds’ broader strategy of recently buying high-growth technology stocks in large amounts.

For investors entering this deal, the case of Japan’s memory chip manufacturer Kioxia provides a reference with some value. Bain Capital had abandoned the plan to take Kioxia to the capital markets in 2020, when the memory chip market was then deeply mired in a supply overhang.

However, times change. Kioxia has now become the highest-market-cap company in Japan, and Bain Capital’s investment is expected to generate nearly 20x returns, potentially becoming one of the most lucrative exit cases in private equity history. This outcome has led the market to reassess the long-term value of the memory chip sector, and to some extent reinforces investors’ confidence in SK hynix’s listing.

Risk warning and disclaimer

        The market is risky; invest with caution. This article does not constitute personal investment advice, nor does it take into account any individual users’ special investment objectives, financial conditions, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article align with their specific circumstances. You bear all responsibility for any investment made based on this.