Chipmaker Alphawave IP tumbles on London debut

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Alphawave IP Group PLC (AWE) shares tumbled 20% on their first day of dealing after floating in London with a value of £3.1bn.

The computer chip maker priced its London initial public offer at 410p per share, but saw the price of its newly listed equity slide to 327p on Thursday morning’s conditional dealings between brokers.

The offer comprised 87mln new shares, raising gross proceeds of £360mln at flotation, while 120mln existing shares were also sold to institutions.

READ: Chipmaker Alphawave IP to be valued at around £3bn in London float

There will be another 31mln shares available by some selling shareholders under the over-allotment option, with a total issued capital of 664mln shares.

The Toronto-based company will start full trading on London’s main market on Tuesday, 18 May.

Announcing its plans to float back in April, Alphawave said it is “growing rapidly” and has a strong pipeline of customers comprising some of the world’s largest tech firms, adding that it has been profitable since its first full year of operation and that from 2019 to 2020 revenues have increased by over 200% year-on-year.

“London was the obvious venue for the listing of our silicon IP business because both the industry and the business model were born in the UK,” said executive chairman John Lofton Holt in a release.

“We are pleased to have executed against our IPO plans successfully, ahead of schedule and supported by a strong UK investor base, alongside a distinguished list of blue-chip investors across the US, Canada and Europe.”

The company, which licences its semiconductor designs to other businesses in a model similar to UK chipmaker ARM Holdings, is joining the market at a time of high demand for semiconductors, with shortages of chips disrupting production of cars and electronic goods across the world.

Last year, global sales increased by 6.8% even amid the pandemic, according to the Semiconductor Industry Association.

“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,” commented Susannah Streeter, senior analyst at Hargreaves Lansdown.

“Luring a tech firm from across the Atlantic in such a sought after industry segment is being seen as a coup for London, and will help iron out the creases rucked up by the messy Deliveroo flotation.”

“A surge in demand is expected for wired technology to meet the needs of the expanding global data market and although the company’s technology may be tightly focused, the potential is huge given the company’s business model. This involves designing semi-conductor connectivity technology, licensing it to other chip companies and receiving royalties from revenues of products using chip designs,” she added.

  **Adds share price**


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