Post by : Badri Ariffin

China's largest memory chipmaker, ChangXin Memory Technologies (CXMT), is moving ahead with its planned $8.6 billion initial public offering (IPO), with six Chinese investment banks expected to receive more than $41 million in fees, according to company filings.

The deal provides a major boost to China's investment banking industry, where IPO-related earnings have declined significantly over the past five years.

Six Investment Banks to Share More Than $41 Million

Company filings show that China Securities and CICC are acting as the lead sponsors for the IPO.

The other investment banks involved in the offering are:

• China Merchants Securities
• Guotai Haitong Securities
• Guoyuan Securities
• Huatai United Securities, a unit of Huatai Securities

CXMT expects to pay 280.6 million yuan in underwriting and related fees, equivalent to around $41 million and 0.48% of the total IPO proceeds.

If the IPO includes an overallotment option and raises up to $9.8 billion, total fees would increase to 296 million yuan, according to the filings.

IPO Market Shows Signs of Recovery

The planned share sale highlights the gradual recovery of China's domestic IPO market.

Authorities have lowered listing barriers for companies involved in artificial intelligence (AI), semiconductors, and robotics, allowing more technology firms to raise funds through public markets as China pushes for technological development.

According to LSEG data, total fees generated from mainland Chinese IPOs this year are expected to reach approximately $684.62 million, moving closer to $984.75 million recorded last year.

The market remains well below its 2022 peak of $4.16 billion, when major listings such as China Mobile and CNOOC helped drive record underwriting income.

CXMT IPO Could Become Asia's Largest This Year

CXMT opened its IPO subscription on Thursday.

The company is China's largest producer of dynamic random-access memory (DRAM) chips, which are widely used in smartphones, computers, servers, and other electronic devices.

If the company successfully raises $8.6 billion, the offering would become:

• Asia's largest IPO so far this year.
• The largest semiconductor IPO ever on China's A-share market.

It would also surpass the 2020 A-share semiconductor IPO completed by Semiconductor Manufacturing International Corp (SMIC).

Lower Fee Rate Reflects Strong Bargaining Position

Although the planned fee rate is significantly below market levels, it reflects CXMT's strong negotiating position.

LSEG data shows the average fee for China A-share IPOs this year is 4.52%, compared with CXMT's 0.48%.

Despite the lower percentage, the large size of the offering still allows participating investment banks to earn substantial fees.

Expert Says Large Deal Still Delivers Strong Returns

Shen Meng, director at boutique bank Chanson & Co in Beijing, said the IPO carries both commercial and strategic importance.

He said competition among investment banks to participate in such a high-profile transaction has pushed fee rates lower. However, because of the large fundraising amount, banks are still expected to receive significant earnings even with reduced fee percentages.

Companies Decline to Comment

CICC declined to comment on the IPO.

CXMT, China Securities, China Merchants Securities, Guotai Haitong Securities, Guoyuan Securities, and Huatai United Securities did not respond to requests for comment.

According to LSEG data, China Securities, CICC, Guotai Haitong, and Huatai Securities ranked among the top five fee earners from China A-share IPOs between 2022 and 2026 year-to-date, while China Merchants Securities ranked ninth.

CXMT Fee Lower Than Recent Major Listing

The fee for the CXMT offering is also lower than that of another recent major listing.

Last month, China Resources New Energy paid a fee equal to 0.65% of proceeds for its 24.5 billion yuan listing in Shenzhen.

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