Managers hired for Toshiba Memory IPO, possibly Japan’s biggest in 2019

The Bain Capital logo is displayed on screen during a news conference in Tokyo, Japan, Oct 5, 2017. (Reuters pic)

TOKYO: US private equity firm Bain Capital has picked Nomura and Mitsubishi UFJ Morgan Stanley to manage an initial public offering of Japan’s Toshiba Memory, a deal that could happen as early as September, people familiar with the matter said.

The listing of the world’s second-largest maker of NAND flash memory chips, which a Bain-led consortium bought for US$18 billion last year, could be Japan’s biggest IPO this year. It would also mark a swift exit by Bain – the firm had previously flagged it was looking for an IPO within three years.

“Bain is looking at an IPO as early as autumn,” said one of the three people, all of whom declined to be identified because the information is not public. Bain has retained Nomura Holdings and Mitsubishi UFJ Morgan Stanley Securities for the IPO process and other banks will participate in the global share sale, the three people said.

The listing could happen as early as September, two of the people said. A representative for Bain was not available for comment. Representatives for Nomura and Mitsubishi UFJ Morgan Stanley declined to comment.

A Toshiba Memory spokesman said, “There is no change to our plans to go public within three years since the acquisition. We are planning to do an IPO at an appropriate time and we are preparing to do so.”

Toshiba Corp, which still retains a 40% stake in the business, said it was not in a position to comment on the IPO.

In preparation for the listing, Toshiba Memory is likely to buy back some 400 billion yen (US$3.6 billion) in preferred shares currently held by US tech firms Apple, Dell, Seagate and Kingston, two of the people said.

It is also looking to refinance some 600 billion yen in debt, meaning it will need roughly 1 trillion yen in funding ahead of the listing, the two people said. Japanese regional banks and insurers are being considered through a syndicated loan, the two people said.

Toshiba Memory could also seek funding from the state-backed INCJ fund and the Development Bank of Japan to the tune of 200 billion yen, the two people said. If it does, that would lower the amount it would need to seek from regional lenders.

Toshiba Corp was forced to sell its prized memory business after being plunged into crisis by cost overruns at its US nuclear unit. It then reinvested US$3.1 billion for the 40% stake in Toshiba Memory, a move some analysts have said was worrisome, given global overcapacity in the NAND memory chips, that are used in smartphones and data storage servers.

The Bain consortium also includes South Korean chipmaker SK Hynix.