# Chip maker Alphawave set for $4.3 billion London IPO after shunning the Nasdaq

The government has been on a drive to make the U.K. a more attractive home for tech companies, including making changes to listing rules, allowing London to better compete with the likes of New York as a global financial center.

Alphawave expects to price at 410 pence per share ($5.78), just above the middle of the 375 pence to 430 pence range it previously set. Issuing 228 million shares at that price will help raise £936 million and give the company a market capitalization of £3.1 billion once it floats.

Founded in 2017, Alphawave is a semiconductor developer with a focus on efficient, high-speed and high-volume data connectivity, building chips to handle the exponential growth of data processing in networks and infrastructure. Its chips are used to push data through computer systems, phone networks, and data centers while using relatively low power, and its tech has applications across 5G wireless infrastructure, artificial intelligence and autonomous vehicles.

“Our technology helps chips communicate with each other, and our innovative approach has quickly made us a leader in the market by enabling data to travel faster, more reliably and using lower power,” said Tony Pialis, the group’s president and chief executive.

Also read: London set to overhaul listing rules to attract tech IPOs and cash in on blank-check boom

Alphawave’s decision to set up shop in Cambridge would put it in the backyard of Arm, a leading chip designer that was bought by graphics microchip maker Nvidia
NVDA,
-3.10%
last year in a $40 billion deal currently facing a national security probe. 

Similar to Arm, Alphawave’s business model relies on licensing its intellectual property to clients. The group counts semiconductor giants TSMC
TSM,
-3.72%
and Samsung
005930,
-1.48%
among its partners, as well as European industrial group Siemens
SIE,
-0.34%,
which builds high-tech factories.

The company has expanded aggressively in the U.K. through a partnership announced in March with Oxford-based Ensilica, a leading designer of custom application-specific integrated circuit, or ASIC, chips.

“The silicon IP business model was born here, and as a result, there is a deep pool of knowledge, experience, and talent for us as we scale and grow the business,” said John Holt, the executive chair of Alphawave.

Alphawave said it has been profitable since its first full year of operation in 2018, and that from 2019 to 2020 revenues increased by more than 200% year-over-year.

Plus: High-tech British firms eye U.S. listings in blow to post-Brexit London stock market

Most of the proceeds from its share issue will go toward growing the group’s global offering to expand revenue streams, as well as servicing customer demand through licensing and manufacturing capabilities, Alphawave said. It also plans to use proceeds to scale its team globally and attract more customers.

The IPO will be closely watched by investors for the temperature of London’s tech IPO market, after shares in U.K. food-delivery company Deliveroo
ROO,
-2.13%
fell by almost a third on their first day of trading in March. Since then, Cybersecurity group Darktrace
DARK,
+0.52%
floated in London in April with a valuation of £1.7 billion, with the shares trading as much as 44% higher in the company’s stock market debut.

Analyst Susannah Streeter, from broker Hargreaves Lansdown, said that Alphawave’s decision to go public was well-timed amid the global shortage of semiconductors.

“Alphawave may be more of a niche player in the industry, developing a small part of the technology, but its launch comes at a time when companies are crying out for better connectivity to adapt to the new digital world and deal with an exponential increase in data,” Streeter said.

The Toronto and London-based company said last month that it had managed to secure agreements with funds and accounts managed by BlackRock and Janus Henderson for $510 million in shares, at a price that gives the company an equity valuation of around $4.5 billion.

Alongside issuing new shares, there will also be an offer of existing stock to be sold by current shareholders. Alphawave expects to have a free float of around 25% of the company’s existing share capital.

The IPO is being coordinated by Barclays and JPMorgan, with Bank of Montreal as a joint bookrunner. Individual investors weren’t invited to participate in the IPO, but will be able to buy Alphawave stock when unconditional trading begins, expected on May 18.