Solidigm U.S. Listing: Will 'Duplicate-Listing Rules' Apply? Retail Shareholders to Query Exchange [fnMarketWatch]

[Financial News]  The scope of Korea's duplicate-listing rules has emerged as a key issue surrounding plans for an initial public offering (IPO) of Solidigm, SK hynix's U.S.-based grand-subsidiary. Unlike the listing of a domestic subsidiary, an overseas IPO is not subject to direct listing review by the Korea Exchange (KRX), making the extent to which standards for protecting the parent company's ordinary shareholders should apply the central question.
According to the investment banking (IB) industry on the 1st, retail shareholder platform Act plans to formally ask the Korea Exchange about the criteria for applying duplicate-listing rules to Solidigm's listing. If the listing process proceeds without shareholder-protection measures, Act also plans to submit a joint petition signed by shareholders to the exchange.
Major foreign media outlets previously reported on the 25th of last month, local time, that Solidigm was selecting lead underwriters with the goal of listing in the United States as early as next year.
The company's valuation is reportedly as high as $150 billion, while the offering size is estimated at around $15 billion, according to the IB industry.
On the 28th of last month, the first trading day after the reports, SK hynix shares fell 5.05% to close at 1.768 million won. SK Square and SK also dropped more than 7% and 5%, respectively, during the trading session. Alongside external factors such as rising interest rates, concerns were raised about stake dilution resulting from Solidigm's separate listing and a discount on the parent company.
On the 21st of last month, Act sent a shareholder letter to SK hynix's board of directors, demanding that it review and disclose Solidigm's need for external financing and the impact on shareholder value compared with using internal funds or borrowing. The group cited the possibility that SK hynix's stake in Solidigm could decline if new shares are issued during the IPO.
Act's Corporate Governance Research Institute is seeking clarification from the exchange on three main issues. First, do shareholder-protection obligations apply from the investment-attraction and lead-underwriter selection stages, even before a listing is finalized? Second, which parent company bears the obligations for Solidigm's listing under a U.S. intermediate holding company? Third, how should shareholder-protection procedures for overseas IPOs that are not subject to exchange review be verified?
Jo Dae-hyun, an expert committee member of Act's Corporate Governance Research Institute, noted, "Even if the listing has not been finalized, shareholders find it difficult to know what the board is reviewing while preparations are underway. The exchange needs to clarify from what point the board should assess the impact on shareholders."
Act plans to submit a petition signed by shareholders to the exchange if the IPO process proceeds without measures to protect shareholder value. The petition will ask the exchange to confirm whether the parent company's board is carrying out a review of the impact on shareholders and protection procedures in line with the purpose of Korea's duplicate-listing rules.
Meanwhile, IB industry observers say the Solidigm case could prompt discussions on shareholder-protection standards for overseas IPOs by subsidiaries of Korean listed companies. Since overseas listings do not undergo direct review by the exchange, the key question is how to define their relationship with Korea's duplicate-listing rules.


[email protected] Kim Kyung-ah Reporter