SK hynix faces dilemma as de facto largest Kioxia shareholder

SK hynix has emerged as the de facto largest shareholder in Kioxia, the world's third-largest NAND flash producer, despite uncertainty surrounding its ability to take part in the Japanese firm's management. This complex strategic position leaves SK hynix with a valuable stake in Kioxia. Kioxia announced on Monday that BCPE Pangea Cayman2 (SPC2) has become its largest stakeholder.

SPC2, a special purpose company set up by U.S. private equity firm Bain Capital, was also invested in by SK hynix. Previously, Toshiba held the largest share of Kioxia, but its stake decreased to 14.12 percent as of July 31 after the company sold shares in the market last month. With SPC2 holding a 14.19 percent stake, it has overtaken Toshiba to become Kioxia's largest shareholder.

SPC2 was established by Bain Capital, but it primarily serves as an investment vehicle exclusively for SK hynix. In 2018, SK hynix poured approximately 3.9 trillion won ($2.75 billion) into the firm through two Bain Capital SPCs - 2.63 trillion won through SPC1 and 1.3 trillion won through SPC2.