ADATA Technology (3260) is conducting a cash capital increase and has reserved 10% of the offering for a public share subscription. Based on the underwriting price of NT$290 per share and a recent market price of about NT$377.5, a winning lot would imply a potential gain of nearly NT$88,000, or about 30%, according to ABMedia.
Details of ADATA’s capital raise
ADATA Technology was founded in 2001. The report describes it as the world’s second-largest DRAM memory module maker and also a leading branded SSD manufacturer. In addition to its core memory and flash storage business, the company owns the gaming brand XPG and has product lines spanning high-end memory modules for AI servers, industrial storage solutions, electric three-wheel vehicles, and green mobility products.
ABMedia said ADATA has benefited in recent years from AI-driven demand for high-bandwidth memory, or HBM, stronger DDR5 demand, and a rebound in storage chip prices. The company is issuing 20 million new shares in this cash capital increase to strengthen operating funds and repay bank loans. Under securities rules, part of the deal has been allocated to public subscription.
How the public subscription works
In Taiwan, this process is formally known as a public subscription. It is a mechanism that lets companies raise funds by offering new shares to the public. When a company goes public or when a listed company carries out a follow-on offering through a cash capital increase, a portion of the shares must be made available for public investors to subscribe.
Investors submit applications through their brokerage trading platforms and must make sure the settlement account has enough money to cover the subscription amount and related fees on the designated deduction date. If the number of applicants exceeds the number of shares available, the Taiwan Stock Exchange runs a computerized random draw.
Costs and risks for investors
The main attraction for most participants is the gap between the underwriting price and the market price. Lead underwriters usually offer shares at a discount to improve demand. Even so, investors still face the cost of having funds locked up. After the subscription deadline, the full payment is deducted and frozen for several trading days until refunds are released for unsuccessful applicants.
The article also notes the transaction costs. Each application requires a NT$20 processing fee and a NT$50 mailing fee for the winning notice. If an investor does not win the draw, the subscription payment and the NT$50 mailing fee are refunded, while the NT$20 processing fee is not.
Subscription window and result date
ADATA listed on the OTC market in 2004. For this deal, 1,700 lots are being offered through the public subscription portion of the capital raise. The report said the price spread appears relatively stable, though the winning rate may be below 1%.
The subscription period runs from Oct. 2 to Oct. 6 before 2 p.m. Investors can apply through the stock subscription function in their brokerage apps and need to deposit NT$290,070. Results are scheduled to be announced on Oct. 8.