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South Korean semiconductor company SK Hynix (KRX: 000660) will list itself on Nasdaq via an offering which may hit almost $28 billion, making SK Hynix close to one of the largest-ever initial public offerings in the market. SK Hynix plans to sell 177.9 million American depositary receipts, while investor subscriptions for the IPO have already reached more than seven times the planned number.According to earlier forecasts, the amount was close to $26.5 billion, but now, according to the prospectus, it’s closer to $28 billion.SK Hynix’s Seoul-listed shares have jumped about 700% in the past year, giving the company a market value above $1 trillion and putting it closer to Micron Technology (NASDAQ: MU), its main US-listed rival.<h3 id="sk-hynix-uses-nasdaq-to-reach-us-investors-while-adr-demand-comes-back-to-life">SK Hynix uses Nasdaq to reach US investors while ADR demand comes back to life</h3>The use of American Depositary Receipts or ADRs allows an investor in America to invest in a foreign company by using the American market. This helps the company reach out for more money, big institutions, and investors who don’t transact in Seoul.Why does the structure matter? ADRs used to be one of the most important ways for Asian firms to access financing from the US. This market became unattractive when Didi Global decided to list in the US in 2021 and was subsequently subject to regulation from China.Meanwhile, Kioxia Holdings (TYO: 285A) is lining up a similar US listing as <a href="https://www.google.com/finance/quote/000660:KRX?sa=X&amp;ved=2ahUKEwia_YfYscaVAxUOQkEAHbgNO78Q3ecFKAR6BAg0EAU" rel="noopener noreferrer nofollow">Hynix</a>. The Japanese chipmaker’s stock has climbed close to 2,800% in Japan over the past year, so it is also trying to catch the US demand while memory chip stocks are still hot.The SK Hynix deal is not a normal first listing. The company already trades on the Korea Exchange, so the Nasdaq sale is a secondary listing.<h3 id="banks-collect-fees-as-cornerstone-buyers-take-a-huge-part-of-the-offering">Banks collect fees as cornerstone buyers take a huge part of the offering</h3>The main banks on the SK Hynix Nasdaq sale are Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), and JPMorgan Chase (NYSE: JPM). Other banks with smaller roles include Cantor Fitzgerald, Mizuho Financial Group (NYSE: MFG), and Stifel Financial (NYSE: SF).The fee pool could pass $140 million. That includes an underwriting fee of 0.5% of the money raised, plus an extra incentive payment from SK Hynix. The fee rate is low for a deal this large, partly because the sale is huge and partly because SK Hynix is not a private company trying to convince the market from zero.However, the greenshoe provision does not apply in the listing of SK Hynix. In that regard, the banks will not be able to issue more shares should the demand remain high. Therefore, the underwriting fees will not be increased from the prevailing levels.It is also worth noting that Citibank (NYSE: C) will gain some revenue from other services provided by the company during the process of the listing. Citibank is the depositary bank for SK Hynix; hence, it will handle all the American depositary shares floated in the US. It will be able to generate some income through the conversion of the shares and dividend payments from the receipts of the shares.The big bidders have come through. Situational Awareness from Leopold Aschenbrenner and Baillie Gifford have expressed interest in purchasing up to $7 billion out of the total $28 billion on offer. This is a huge chunk of the book, considering allocation will be the battle that follows.In case SK Hynix takes the whole offer, then the offering is bound to be similar to that of Saudi Aramco’s (TADAWUL: 2222) IPO, which was worth about $29 billion.For Wall Street, the fee total would rank among the biggest payouts from an Asian company. Alibaba Group (NYSE: BABA) raised $25 billion in 2014, and that listing produced about $300 million in banking fees, based on Dealogic figures.The ADR setup still comes with work. SK Hynix has to deal with depositary bank rules, the ratio between each US receipt and the ordinary Seoul share, and the process for converting one form into the other. Some emerging-market regulators also worry that ADR listings can pull money out of local markets, affect currencies, and weaken efforts to build stronger domestic capital markets.The smartest crypto minds already read our newsletter. Want in? <a href="https://www.cryptopolitan.com/newsletters/?utm_source=cp&amp;utm_medium=web&amp;utm_campaign=inlineAds" rel="noopener noreferrer nofollow">Join them</a>.

SK Hynix is preparing a major US listing that could raise about $28 billion

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