SK hynix faces dilemma as de facto largest Kioxia shareholder

SK hynix, the world's third-largest NAND flash maker, has found itself in a unique position as the de facto largest shareholder in Kioxia, another major player in the NAND flash industry. This shift in ownership dynamics has left SK hynix with a valuable yet complex strategic position.

According to Kioxia's regulatory filing, special purpose company BCPE Pangea Cayman2 (SPC2), established by U.S. private equity firm Bain Capital and invested by SK hynix, is now the largest shareholder in the Japanese company. SPC2 maintains a 14.19 percent stake in Kioxia, surpassing Toshiba, which had previously held the top position with a 14.48 percent stake.

Toshiba's stake decreased from 14.48 percent in July to 14.12 percent as of the filing date, following the Japanese company's share sale on the market last month. The SPC2 stake remains at 14.19 percent, solidifying its position as Kioxia's largest shareholder.

Established by Bain Capital in 2018, SPC2 primarily serves as an investment vehicle for SK hynix. In a strategic move, SK hynix invested approximately 3.9 trillion won ($2.75 billion) through two Bain Capital SPCs - 2.63 trillion won in SPC1 and 1.3 trillion won through SPC2. This investment highlights SK hynix's significant stake in Kioxia and the complexities that come with being the de facto largest shareholder.