Alphawave IPO to value chip design company at £3.2 billion with founders set for huge payday

by Jonathan Adams

The London IPO of Canadian chip design company Alphawave IP has set its price range at a level that could, at its top end, value the company at as much as £3.2 billion. Shares will be sold at between 375p and 430p, with the start-up’s three co-founders and other key staff with equity stakes to sell up to £450 million of their stock via the flotation.

The company plans to sell equity worth a total of up to £810 million, with £360 million also being raised to fund expansion. That total may also be increased should an over-allotment option be activated.

A valuation of up to £3.2 billion, or even a little under £3 billion at the lower end of the range, would be hugely impressive for a company that still only employed 72 people at the end of last year. Especially given the company was only established 4 years ago. It will also make multi-millionaires of founders Jonathan Rogers, Rajeevan Mahadevan, and Tony Pialis to compensate them for having to reduce their own stakes for the start-up to achieve a 25% free-float.

Alphawave doesn’t manufacture semiconductors itself but designs them, with their technology IP then licensed to major manufacturers like the Taiwan Semiconductor Manufacturing Company (TSMC). The designs are used in connected gadgets and machines from cars to laptops as well as being hugely popular with data centres.

All three co-founders, who each currently hold 21% of the company’s equity, will remain major shareholders after the start-up’s IPO. They also all hold key roles in the hierarchy and will continue to do so for the foreseeable future. Pialis is the chief executive, Rodgers the senior vice president of engineering and Rajeevan the principal analog design engineer. Alphawave appointed John Lofton Holt as executive chairman earlier this year, ahead of the IPO.

On the reaction of investors to the IPO, Mr hold commented a warm reception to the offering had “completely validated our decision to list in London”. Wall Street’s NYSE and Nasdaq exchanges as well as the Toronto stock exchange were also considered but a major factor in favour of London was the complementary opportunity to open a research centre in Cambridge. The region is home to a concentration of semiconductor design companies including ARM and Imagination Technology and often referred to as ‘Silicon Fen’.

Demand for microchips, especially the more sophisticated designs required by the current generation of connected devices, referred to as Internet of Things, has soared in recent years. Supply chain disruptions caused by the Covid-19 pandemic have led to recent shortages that have led to manufacturing delays in several industries and particularly automobiles. However, the current bottleneck, which is anyway easing, won’t negatively impact Alphawave because its licensed designs don’t go into production until years into the future.

The IPO’s final pricing is due to be announced next Friday and the float will be London’s second multi-billion tech IPO in a matter of weeks after the recent successful listing of cybersecurity company Darktrace.

This article is for information purposes only.
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