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HIGHLIGHTS
- Imagination Technologies is exploring options for an initial public offering (IPO) on the London Stock Exchange (LSE).
- It has collaborated with Lazard Ltd. to study the strategic alternatives, which include a sale.
- Canyon Bridge acquired Imagination Technologies in 2017 for £550 million ($763 million). The funds for the deal were provided by China Reform Fund Management.
Imagination Technologies Ltd., a UK-based company engaged in semiconductor designing and backed by Canyon Bridge Capital Partners, a China-backed private equity company, is exploring options for an initial public offering (IPO) on the London Stock Exchange (LSE).
The company, which is best known for its range of PowerVR graphics processing cores used in mobile phones, collaborated with Lazard Ltd. to study the strategic alternatives, which also include sale. The company is expected to add more advisers if it decides to proceed with the sale of shares. It must, however, be noted that both the IPO and sale propositions are in the early stages, and there is a lack of clarity with respect to the exact consequence transaction.
© 2021 Kalkine Media Ltd.
Investor details
Canyon Bridge acquired Imagination Technologies in 2017 for £550 million ($763 million). The funds for the deal were provided by China Reform Fund Management, a China state-owned asset management company. It is the principal investor in Canyon Bridge.
Imagination’s relationship with Apple (NASDAQ: AAPL)
Imagination Technologies was a public company. The sale of Imagination Technologies to a China-backed investor was followed by Apple’s announcement in the same year to gradually end its agreement with the semiconductor design company. During that time, Apple accounted for a majority share of Imagination’s revenue. Wind down of its contract with Apple caused the company’s share price to dramatically decline and forced a sell-off in 2017. In January 2020, Imagination Technologies renewed its licensing agreement with Apple.
Regulatory scrutiny and its impact
In 2020, Imagination Technologies engaged in licensing its designs to Apple Inc. The semiconductor designer came under regulatory purview with regards to its association with the China Reform Fund Management that backs Imagination Technologies’ private equity owner - Canyon Bridge Capital. The company’s intentions to put China Reform’s representatives on the Imagination Technologies’ board triggered a backlash and also resulted in the resignation of the company CEO Ron Black.
Post the withdrawal of the proposal, the Foreign Affairs Committee of the UK Parliament ordered the interim CEO Ray Bingham and Canyon Bridge to reassure lawmakers that the move was not a part of the company’s initiative to relocate its headquarters to China.
Bottom Line
The UK has been witnessing a boom in IPO listings in the past year or so. Nevertheless, changing macroeconomic scenario and a potential change in listing rules is expected to further draw capital into the market. Thus, Imagination Technologies may benefit by riding the IPO wave since the company has already tested the waters in the past.
