Alphawave IP Group has its sights firmly set on a London Stock Exchange (LSE) listing with share prices ranging from £3.75 to £4.30 - amounting to a valuation of up to £3.2 billion according to bookrunner JP Morgan. As a Canadian firm, Alphawave’s choice to debut in London is a significant indicator that despite COVID-19 and Brexit uncertainty, the LSE is still capable of showcasing pulling power for up and coming unicorn companies.

The Toronto-based company, which designs semiconductor technology before licencing it to other businesses, plans to raise up to £810 million from its IPO, selling £360m in new shares and £450m in existing stock - aiming for a minimum free float of 25%. 

As part of the London flotation, Alphawave will move its headquarters to the UK, generating some very welcome new business in a country that some foreign businesses have been wary of relocating to due to issues surrounding post-Brexit trade with the rest of Europe. 

The move will also be greeted as a valuable addition to the burgeoning London IPO market which has enjoyed a relatively strong start to 2021 but has suffered in the wake of Deliveroo’s recent failed IPO - with some investors doubting whether the LSE’s ready to host tech firms. 

“I am excited to confirm our intention to list on the LSE,” explained Tony Pialis, Alphawave president and chief executive. “The listing will help us extend our leadership by accelerating and expanding our new and innovative portfolio of products, as well as expand our base in Canada into the UK, where we will continue to grow our business and partnerships globally.”

Alphawave’s arrival will be regarded as something of a coup in London, a city which hasn’t seen a new semiconductor firm listed since Kromek Group’s arrival in 2013. 

London IPOs Building on a Prosperous Start to 2021

The news of Alphawave’s arrival in London comes off the back of the London Stock Exchange experiencing its best start to a year for flotations since 2007 - despite the conspicuous setback suffered by the debut of Deliveroo in the UK capital. 

The highly anticipated IPO of Deliveroo, along with review website Trustpilot and a collection of smaller firms on the Alternative Investment Market paved the way for an IPO frenzy in Q1 of 2021. 

According to EY data, 12 IPOs raised £5.2 billion on the main market, while eight more listings made £441m collectively on the Alternative Investment Market - amounting to the most lucrative quarter for listings in the capital in almost 15 years. 

“The UK has had the strongest opening quarter for IPOs for 14 years, with the markets successfully weathering the effects of Brexit and bouncing back from the stall in activity caused by the onset of the pandemic a year ago,” said Steve McCubbin, EY partner. “With an effective vaccine rollout under way, momentum and confidence in the UK IPO market should continue to build, but future growth may vary depending on the sector.”

(Image: Bloomberg)

As the data above shows, the UK’s Q1 performance appears set to build on the prosperity of London’s collective IPO proceeds from 2020. At a total of $11.3 billion, London dwarfed other European exchanges as the place for companies to go to for a successful flotation. 

Despite the COVID-19 pandemic, many internationally renowned firms are intending to go public in London over the course of 2021. Cybersecurity giants DarkTrace are among the most hotly anticipated debuts of the year, but in attracting the Toronto-based Alphawave, it’s clear that there’s still plenty of room for more big name arrivals over the course of the year. 

Assessing Alphawave’s IPO

Alphawave has identified its listing in London as an ideal opportunity to generate the cash that the company needs to grow and further build its profile as a tech leader. There’s little doubting that connectivity solutions will be needed as more businesses turn to digital transformation, and Alphawave’s market position means that it’s well placed to benefit from this widespread need for embracing more digital solutions. 

According to CityIndex, Alphawave has anticipated that its market was worth around $500 million in 2020 and will grow to $1.5bn by 2025. The IPO proceeds from the London listing are set to be used to fuel further growth. Approximately 20% of proceeds will be used to scale the company’s workforce as a means of winning new customers, while 40% will be allocated towards boosting Alphawave’s global offering to drive more licencing and more royalty revenues - while the final 40% will be used to satisfy the growing global demand for Alphawave’s chiplet technology. 

Alphawave’s London listing has been hotly anticipated by commentators around the world, and Nasdaq listed online retail investment brokerage, Freedom24, acted fast in creating a dedicated page to facilitate the participation of individual investors in the company’s IPO. 

Maxim Manturov, Head of Investment Research at Freedom Finance Europe, says that: “Historically, institutional investors get around 90% of all shares, with only around 10% left for retail trades. This is where allocation comes from: when the demand is high, the broker will have to reduce order amounts so as to at least partially fill all of them. The allocation ratio, meanwhile, depends on the investor trading activity and volume.”

Alphawave’s choice in coming to the UK highlights London’s pulling power in attracting exciting IPOs, and with a busy investing landscape forecast for 2021, the successful listing of the Canadian company could pave the way for more global interest in the potential of LSE debuts.