By Paul Sandle and Muvija M
LONDON (Reuters) -Alphawave, a Toronto-based silicon IP firm, is planning to list in London to expand the reach of its chip connectivity technology and could be valued at up to $4.5 billion based on cornerstone agreements with two major investors.
About $500 million would be raised by issuing new shares, it said, and existing investors would also offer stock.
Alphawave, founded in 2017 and profitable since 2018, said BlackRock (NYSE:BLK) and Janus Henderson had agreed to subscribe for $510 million of offer shares at a price that would give the firm an equity value of up to $4.5 billion at admission.
"We have chosen to come to the UK because of its incredible technology and semiconductor industry ecosystem," Chief Executive Tony Pialis said on Thursday.
"The strong research base in the UK - and our new R&D headquarters in Cambridge - offers an excellent foundation for the next stage of our global growth."
Alphawave licenses its high-speed data transmission technology to chipmakers and receives a royalty on every chip produced, replicating a model pioneered by Cambridge-based ARM.
ARM was sold to Japan's Softbank (T:9984) in 2016 for $32 billion pounds, 18 years after it listed in London.
Last year, Softbank agreed to sell ARM to Nvidia (O:NVDA) in a $40 billion deal that is being scrutinised by Britain.
"A lot of people have called us the ARM of the connectivity business and that's a very fair analogy," Chairman John Lofton Holt said. "We monetize in exactly the same way."
CUTTING EDGE
Pialis said Alphawave's IP was being used at the cutting edge of chip design, at seven, six and five nanometers, and soon to be at four and three, with manufacturers like TSMC, Samsung (KS:005930) and most recently Intel (NASDAQ:INTC).
Lofton Holt said the board had considered New York and Toronto before choosing London.
"Investors in the UK, Europe and even in the U.S. really understand that the UK has been the birthplace of silicon IP, so it's a natural place for us to list," he said.
It will join cybersecurity firm Darktrace in going public, and will follow Deliveroo, whose IPO flopped last month.
Lofton Holt said unlike some other companies, Alphawave had been profitable since its first full year of operation.
The company's bookings, which reflect projected revenues, increased from $27 million in 2019 to $75 million in 2020 and exceeded $80 million in the first quarter of 2021.
One source close to the deal said investors were taking each IPO on its own merits.
"I don't think one IPO performing badly necessarily hurts the market," the source said, adding that solid cornerstone investors were helpful for issuers.
Barclays (LON:BARC) and J.P. Morgan will be joint co-ordinators and bookrunners, and BMO Capital Markets will be a joint bookrunner.