Politicians from both the ruling and opposition parties welcomed SK hynix's (000660) decision to halt its review of an initial public offering for Solidigm, its U.S. subsidiary. The ruling Democratic Party of Korea stressed that investor pressure drove the company's decision and signaled plans to tighten the rules, while the opposition People Power Party criticized the Lee Jae-myung administration for its passive response to the parent-subsidiary listing controversy.
Rep. Kim Hyun-jung of the Democratic Party wrote on Facebook on the 23rd in a post titled "Solidigm IPO Withdrawal Is a Victory for the People" that she had been contacted directly by SK hynix that morning and informed the company would stop reviewing the Solidigm IPO.
"The company cited market conditions, but it was the public and investors who brought about this decision," Kim said. She noted that the stock fell more than 10% in a single day on the listing speculation alone, and that critics had called the prospect of a "five-layer chain of parent-subsidiary listings" an export of the Korea discount overseas.
Kim added that she had raised the Solidigm parent-subsidiary listing issue during this year's parliamentary audit of government agencies and called for overseas listings to be covered without exception. "In the end, the common-sense view that the fruits of growth should belong to existing shareholders prevailed," she said.
She argued, however, that the decision must not be a one-off. Kim said overseas listings fall outside the Korea Exchange's review, forcing regulators once again to wait for an authoritative interpretation of the rules. "I will close the gaps in the system so that we do not have to depend on one company's decision," she said, adding that a market where shareholders are respected is the way to end the Korea discount.
Rep. Ahn Cheol-soo of the People Power Party welcomed the withdrawal but took issue with the government's handling of the matter. In a Facebook post the same day, Ahn said the withdrawal was the result of ordinary retail investors making their voices heard, and expressed hope that it would prompt SK hynix to recognize that shareholders and companies must now grow together.
He then turned his criticism to the Lee administration. "The problem is the Lee Jae-myung government," Ahn said, arguing that it had remained silent for months without a clear position on parent-subsidiary listings while touting its value-up drive.
"It did nothing while shareholder concerns boiled over and half the share price was cut away," Ahn said. "People already find it hard to look at their stock accounts. Must they now monitor the market every day and post manifestos as well?"
Concerns had been raised earlier that pursuing a U.S. listing for Solidigm could lead to a discount on SK hynix's corporate value. The plan drew pushback because issuing new shares to attract outside capital would dilute existing shareholders' indirect stakes and reduce their claim on future profits.
SK hynix said in a regulatory filing the same day that it was halting its review of both a pre-IPO funding round and an IPO for Solidigm. "Solidigm, our overseas subsidiary, has been reviewing various financing options to expand production capacity and strengthen competitiveness, but after comprehensively considering capital market conditions and other factors, it has decided to halt its review of a pre-IPO round and an initial public offering," the company said.