Investing.com -- Kioxia Holdings, a Japanese chip maker, saw its shares rise by 10% in its initial public offering (IPO), closing at 1,601 yen.
This surge in shares was driven by strong investor interest in chip manufacturers, as the industry capitalizes on the current artificial intelligence boom. The company's market capitalization now stands at ¥863 billion, or $5.62 billion.
Kioxia issued new shares as part of the IPO, while two of its biggest shareholders, Bain Capital and Toshiba Corp. (TYO:6502), sold portions of their stakes.
The company, backed by Bain Capital, produces NAND flash-memory chips, which are utilized in smartphones, computer servers, and other devices. Kioxia anticipates growth in the flash-memory market, fueled by the increasing demand for AI applications and data centers.
The company has a manufacturing partnership with Western Digital (NASDAQ:WDC), a San Jose, California-based company. Western Digital manufactures solid-state drives, NAND chips, and hard-disk drives.
Despite the profitability of chip-making during tech booms, Kioxia acknowledges its vulnerability to downturns. The company is expecting a decrease in revenue and net profit for the quarter ending in December as compared to the previous three months.
Kioxia reported a net profit of ¥176 billion for the first half ending in September, bouncing back from a loss in the same period the previous year. This recovery was accompanied by an 85% jump in revenue to ¥909 billion. However, for the year ending in March, the company saw a widening net loss amid a decrease in revenue.
In its IPO, the company offered a total of 82.7 million shares, which included 21.6 million newly issued shares.
Kioxia expressed its intention on Wednesday to continue urging its major shareholders to reduce their stakes. This is in order to meet a public-float requirement of 35% or higher within five years; a significant increase from the current 28%.
At the time of listing, Toshiba (OTC:TOSYY) held a 32% stake, and Japanese company Hoya had a 3.0% ownership.
In November, Kioxia stated that its competitor, SK Hynix, would be able to control a Bain Capital entity that held a stake in Kioxia, if the Korean company decided to convert bonds into shares of the entity. As of Wednesday, this entity held a 14% stake.
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