Financial institutions are closely watching SK Hynix’s funding plan for the $9 billion acquisition of Intel’s memory chip unit, with the company believed to be looking at raising loans or brokering a partnership with private equity investors.

SK Hynix, which is part of South Korean conglomerate SK Group, will pay 10.3 trillion won for the Intel unit, with about 8 trillion won due to be paid before the end of 2021 and the rest by March 2025. SK Hynix said it intends to finance the deal with cash in hand and debt.

The chipmaker’s cash and cash equivalents totaled approximately 5.26 trillion won at the end of June. Given its investment-grade status – ‘AA0’ from local credit rating firms and ‘BBB-’ with a stable outlook from S&P Global Ratings – it could consider issuing additional debt in domestic and global corporate bond markets.

Another available option is to take out loans, which could allow SK Hynix to capitalize on lower interest rates resulting from intensifying competition among banks in the acquisition financing market. A group of state-controlled banks are also said to be favorable about lending to the firm, because the deal is considered important in enhancing the country’s competitiveness.

SK Hynix may also raise cash by selling all or part of its minority stake in Kioxia, a Toshiba Corp spinoff which it acquired two years ago, industry watchers said.

There are mixed opinions on whether SK Hynix would be interested in partnering with private equity (PE) investors, with some observers convinced it has enough financing options on the table. However others said the possibility cannot be ruled out, as  SK Group is actively collaborating with PE firms.

In March, SK Hynix invested in a project fund jointly managed by Alchemist Capital Partners and Credian Partners to acquire a minority stake in MagnaChip Semiconductor Corp. Last year, SK Telecom also teamed up with a consortium of Mirae Asset Daewoo and Mirae Asset Global Investments to merge cable TV service provider Tbroad with its subsidiary SK Broadband.

SK Telecom’s 2018 purchase of ADT Caps was another collaboration with a PE investor. The telco bought the security service provider for about 3 trillion won ($2.6 billion) in partnership with Macquarie in a deal that enabled SK Telecom and Macquarie to own 55% and 45% stakes respectively.

“SK Hynix, whether it wants it or not, is likely to be approached by several local and foreign private equity firms that want to participate in the acquisition of the Intel unit, given the sheer size of the deal,” an industry insider said. (Reporting by Hee-yeon Han)