Shares of major SK Group affiliates fell sharply on the 20th as controversy widened over a plan to list Solidigm, the U.S. unit held under SK hynix (000660). Financial regulators said a day earlier that the proposed listing runs afoul of rules on parent-subsidiary (dual) listings, and worries that existing shareholders could see their interests eroded weighed on investor sentiment.
SK hynix traded at 1.225 million won as of 9:39 a.m. on the 20th, down 4.07% from the previous session, according to the Korea Exchange. SK Square (402340), the largest shareholder in SK hynix, fell 4.36% to 746,000 won. SK Inc., the group's holding company, dropped 4.81% to 435,500 won. The declines stood out even as the broader market weakened, with the KOSPI falling more than 2% in early trading.
The dispute over Solidigm's planned U.S. listing is seen as the main drag on sentiment across the group's shares. Solidigm was created after SK hynix acquired Intel's NAND flash and solid-state drive business. Foreign media reports said Solidigm has selected Goldman Sachs and Morgan Stanley as lead underwriters for an initial public offering and is considering a listing next year. Concerns that bringing in outside capital through a subsidiary listing could dilute the value of existing shareholders' stakes are also weighing on SK hynix's valuation.
Financial authorities have publicly raised the parent-subsidiary listing issue. Lee Chan-jin, governor of the Financial Supervisory Service, told a parliamentary audit at the National Assembly's National Policy Committee a day earlier that both the Financial Services Commission and the FSS consider the Solidigm plan to run afoul of dual-listing rules. He said, however, that a formal legal interpretation is needed on whether the listing of an overseas subsidiary falls within the scope of domestic securities registration reviews. Lee indicated he would continue reviewing the matter, take possible measures and convey the concerns to SK hynix.
With regulators publicly flagging the issue, uncertainty over the Solidigm listing has grown. Despite expectations that a U.S. listing could secure large-scale funding for investment, the possibility of harm to existing shareholders has emerged as the central question, leaving the regulator's judgment and SK hynix's response as the key variables.
