Alphawave (AWE): What led to 50% share price drop from IPO listing?

4 min read | September 30, 2021 11:45 PM AEST | By Suhita Poddar

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Highlights

Alphawave IP Group PLC’s shares had dropped over 50 per cent on Wednesday after a Financial Times article stated the company had not sufficiently disclosed its ties with its key contractors.

The company listed on the LSE in May and was touted as the biggest semiconductor IPO on the exchange, having a valuation of £ 3.1 billion and a listing price of GBX 410

Alphawave’s shares, despite a strong recovery, are down over 48 per cent since listing.

LSE-listed chip technology company Alphawave IP Group PLC (LON:AWE) partly recouped its losses today, rising by over 17 per cent after witnessing a sharp fall in its share price yesterday.

It’s shares fell over 50 per cent on Wednesday, after a Financial Times report stated the company had not disclosed its ties with some of its key contractors, including VeriSilicon.

The slump in its share price comes just months after a blockbuster initial public offering (IPO) on the London Stock Exchange (LSE) earlier this year.

Alphawave IP Group’s (LON:AWE) share price performance

The Canadian company’s shares were trading at GBX 211.60, up by 17.30 per cent on 30 September 2021 at 09:28 AM BST. Comparatively, the technology sectoral index was trading at 2,115.06, up by 0.53 per cent.

Alphawave was the highest riser in the technology sector during Thursday’s first half of trade on the LSE. Alphawave’s market cap stands at £1.199 billion as of 30 September.

Alphawave IP Group share price and volume

(Image Source: EODHD/Others)

Alphawave IP Group’s IPO details

The semiconductor IP company had raised £856 million in its IPO, which gave it a market valuation of £ 3.1 billion. This valuation made it the biggest semiconductor company listings on the LSE.

Alphawave had debuted on the LSE on 13 May, and the company’s IPO listing price was at 410 pence per share.

The current trading price states that the company’s shares are down 48.27 per cent from its IPO listing price.

Alphawaves IPO and current market performance

The Toronto based company had shifted its headquarters to London in April as part of the listing.

Alphawave’s ties with VeriSilicon

According to the Financial Times article, Wayne Dai, the founder and chairman of Chinese silicon solutions firm VeriSilicon’s, is the brother-in-law of Sehat Sutardja, a member of Alphawave’s board.

Mr. Sutardja was appointed to Alphawave’s board as an executive director in April earlier this year. He is also a key shareholder at the firm.

Alphawave had subsequently released a statement regarding its sharp share price fall on Wednesday, stating it had disclosed all related party transactions in its IPO prospectus and also in its recent H1 2021 results.

The company had signed a US$ 54 million multi-year exclusive agreement earlier this year in February with VeriSilicon. The subscription reseller agreement was signed before Alphawave’s public listing in May.

Alphawave, on its part, has though stated that it has not seen any revenues from the transaction as yet.

Interim H1 2021 Results

The group’s bookings rose to US$ 196.1 million in H1 2021, up by over 490 per cent from the previous year.

Additionally, the company’s H1 2021 revenues also saw a 140 per cent increase to US$ 27.6 million, from US$ 11.5 million in H1 2020.

Due to its strong growth, Alphawave increased its FY 2021 guidance, estimating its revenues to be over US$ 75 million. The latest guidance indicates a more than 125 per cent yearly growth, up from its earlier guidance of 100 per cent.

Cooling global IPO scenario:

Alphawave’s IPO debut was a part of the recent IPO boom, especially in the tech sector since the onset of the pandemic.

However, the total capital raised via IPOs globally eased to around US$ 94.6 billion in Q3 2021, down by 26.3 per cent from Q2 2021, according to data platform EODHD/Others.

The slowdown came as listing activity eased during the summer months and as Chinese listings in the US faced higher levels of scrutiny following China’s crackdown on its major company’s US listing plans.

The data also found that although the total capital raised had dropped in Q3, the number of IPO listings in the first 9 months of the year was still at the highest number since the dot com bubble.

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