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CXMT Raises $9.8 Billion in China's Second-Largest IPO Ahead of Shanghai Debut
Summary
Chinese memory chip maker CXMT Corp. has raised 66.6 billion yuan ($9.8 billion) in a heavily oversubscribed offering, marking China's second-largest domestic IPO on record.
Chinese memory-chip manufacturer CXMT Corp. is set for its Shanghai market debut after raising 66.6 billion yuan ($9.8 billion) in a heavily oversubscribed initial public offering. The fundraising is China's second-largest domestic IPO, trailing only the Agricultural Bank of China's 2010 listing, according to a Bloomberg report.
Offering Details
CXMT sold 6.688 billion shares priced at 8.66 yuan each, giving the company a pre-trading valuation of approximately 580 billion yuan. Investor demand was exceptionally strong, with the retail portion of the offering oversubscribed 212 times.
The company's IPO was priced at about 2.4 times its book value, representing a 56% discount to the average valuation for global dynamic random-access memory (DRAM) producers like SK Hynix Inc. and Micron Technology Inc., as cited in the report.
Market Implications
With newly listed shares in Shanghai not subject to daily price limits for their first five trading sessions, CXMT could experience a significant rally on its debut. A first-day gain of around 330% would elevate its market capitalization above that of the Industrial and Commercial Bank of China, potentially making it the most valuable company listed in mainland China.
AdRecent debuts of Chinese AI-related companies have seen substantial opening gains, setting a strong precedent. The successful listing could also provide a tailwind for other planned technology IPOs from firms such as Yangtze Memory Technologies and Baidu Inc.'s Kunlunxin chip division.
Strategic Context
Based in Hefei, CXMT is the world's fourth-largest producer of DRAM, a critical component in smartphones, computers, and servers. The company is also developing high-bandwidth memory (HBM), which is essential for advanced artificial intelligence data centers.
This listing offers investors direct exposure to Beijing's strategic initiative to bolster its domestic semiconductor industry and reduce its dependence on foreign technology. Furthermore, CXMT may become eligible for the Stock Connect program as early as September, which would grant international investors in Hong Kong greater access to its shares.
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