On Saturday, according to two sources familiar with the matter at hand, Toshiba Corp plans on gradually trimming its 40% stake from Kioxia Holdings following its IPO later this year.
Kioxia Holdings, the world’s second-largest flash memory chip maker, is considering ploughing back nearly 50% or more of its post-tax proceeds from the sale of its stake back to shareholders, said sources on the condition of anonymity since the matter is in the private domain.
In a filing with the Tokyo Stock Exchange on Saturday Toshiba said, it was considering various scenarios to boost shareholder returns, including handling of assets and reviewing its portfolio.
A decision on its stake in Kioxia has yet to be taken, said Toshiba. In 2018, in a deal it sold a portion of its stake to a consortium led by U.S. private equity firm Bain Capital for $18 billion.
Sources opine Kioxia’s initial public offering could be Japan’s biggest listing in 2020.
According to media reports, Kioxia’s market valuation could touch $32 billion with the IPO being as early as October.
Uncertainties created by the Coronavirus pandemic however could effect the timing and valuation of the IPO.
Overseas funds who have invested in Toshiba are pressurizing the company to sell its stake on the grounds that flash memory chips are a highly volatile business and could result in swings in Toshiba’s earnings.
Nearly 70% of Toshiba’s shareholders are non-Japanese.