July 6, 2020 / 3:57 PM / a month ago

Cambricon to raise $367.8 million in IPO amid Chinese chip fever

SHANGHAI (Reuters) - AI chipmaker Cambricon Technologies Corp 688256.SS said it will raise 2.58 billion yuan ($367.76 million) in its Shanghai initial public offering after pricing the listing at 64.39 yuan a share.

Chipmakers like Cambricon are lining up to list in China, seeking to exploit a bullish market and strong investor appetite for a sector crucial to Beijing’s rivalry with Washington for technology supremacy.

The announcement comes days after Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) (0981.HK) said it would raise $6.6 billion, in what will be the world’s biggest listing so far this year, based on Refinitiv data.

Cambricon’s IPO price tag values the company at 58.03 times its 2019 sales based on the post-IPO capital base. That compares with an average price-to-sales ratio of 34.54 for five China-listed peers,according to the exchange filing.

Companies turned to Shanghai’s one-year-old tech-heavy STAR Market to raise $6.96 billion via listings in the first half. This dwarfed Shanghai’s main board and has made STAR Market the world’s second-biggest IPO venue,trailing only Nasdaq,where companies raised $15.5 billion in the first half, based on Refinitiv data.

China has been stepping up capital market reforms amid tech-related tensions with the United States.

The official China Securities Journal said on Monday China’s economy was recovering, while its capital markets are undergoing reform and attracting money from home and abroad, setting the scene for a healthy bull market.

Cambricon is offering 40.1 million new shares, and will use the IPO proceeds to fund three chip projects and to replenish working capital.

The company’s net loss ballooned to 1.18 billion yuan in 2019, from 41 million yuan a year earlier, although its revenue more than tripled to 443.9 million yuan, the company’s prospectus said.

Huawei subsidiary HiSilicon used to be a key source of revenue for Cambricon, but in 2019 decided to develop AI chips itself, becoming a direct competitor, the company said in the prospectus.

Reporting by Samuel Shen and Josh Horwitz. Editing by Jane Merriman

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