LONDON: Alphawave IP Group plc, a leading semiconductor IP company, is considering an initial public offering (IPO), and applying for admission of its ordinary shares to the standard listing segment of the Official List of the Financial Conduct Authority (FCA) and to trading on the main market of the London Stock Exchange, a news release said.

Potential Offer Highlights

 Should Alphawave IP proceed with an IPO, the current expectation is that:

· The Company’s shares would be admitted to the standard listing segment of the Official List of the FCA and would be admitted to trading on the main market for listed securities of the LSE

· The Offer would comprise an offer of new shares to be issued by the Company (raising gross proceeds of approximately USD 500 million) and an offer of existing shares to be sold by existing shareholders

· The Directors believe the Offer and Admission will position the Company for its next stage of development by:

o providing the Group with a platform for continued growth into new technologies and key geographies, including Europe, the United Kingdom and Asia, while being able to continue to service the North American market;

o enhancing its public profile and generating brand awareness in a market that understands the global scope and scale of opportunity for the Group;

o providing access to a wider range of capital-raising options, which may be of use in the longer term;

o further improving its ability to cost-effectively scale, recruit, retain and incentivise its key management and employees; and

o creating a stable and liquid market in the Ordinary Shares for existing and future Shareholders

· Immediately following Admission, the Company intends to have a free float of at least 25 per cent. of the Company’s issued share capital. In addition, it is expected that up to a further 15 per cent. of the Offer will be made available pursuant to an over-allotment option

 Alphawave IP Group Highlights

 · Alphawave IP is a leading semiconductor IP company focusing on the hardest-to-solve connectivity challenges created by the exponential growth of data

· Alphawave IP addresses a critical need in the technology world: the Group builds industry-leading wired connectivity solutions that enable data to travel faster, more reliably, using lower power

· The Group has been profitable since its first full year of operation in 2018. The Group achieved gross margins in excess of 95 per cent. and EBITDA margins of 53.9 per cent. for the year ended 31 December 2020

· The Group is growing rapidly. Bookings, reflecting total projected revenues from contracts entered into during the period, increased from USD 27 million in 2019, to USD 75 million in 2020 and exceeded USD 80 million in Q1 2021. Total bookings 2017-2021YTD are nearly USD 200 million. From 2019-2020 revenues increased over 200 per cent. year-on-year

· The Group has a strong pipeline with Tier-1 customers comprising some of the largest technology companies in the world. As at 1 March 2021, the Group’s potential sales pipeline based on customer discussions (which generally extends out by approximately 18-24 months) was over USD 400 million, including across cloud compute and data centre, data networking and optical, solid-state storage, 5G wireless customers and AI customers

· In addition, funds and accounts managed by BlackRock, and Janus Henderson, have each entered into cornerstone agreements with the Company to subscribe for, subject to certain conditions, in aggregate, c. USD 510 million of Offer Shares at an offer price representing an equity value of up to USD 4.5 billion for the Group at Admission. Acting as cornerstone investors, the commitments will consist of c. USD 390 million from BlackRock and c. GBP 85 million (equivalent to c. USD 120 million) from Janus Henderson

Clear use case and large Total Addressable Market (TAM)

 · Alphawave IP addresses the growing need for advanced and high-speed data transmission – as technological advances in smart-devices and digital integration continue to push the boundaries of connectivity capabilities in everyday products from automobiles to AI-enabled devices, the underlying data networks and data centres that support them require high-performance connectivity

· Alphawave IP believes there is a substantial market opportunity as the Group maintains and expands its technology leadership. The Group estimates its total addressable market opportunity for its current products to be USD 500 million in 2020, growing to USD 1.5 billion in 2025, representing a CAGR of approximately 23 per cent. By 2024, the addressable market for the Group’s future products is forecast to exceed USD 50 billion

· This current and future market includes addressable content in data centre, networking, storage, with additional potential upside from 5G wireless infrastructure, artificial intelligence, and autonomous vehicle markets

Established Tier-1 client base with global reach

 · Alphawave IP’s wired connectivity technology is embedded in leading-edge semiconductors built to power global network and computer systems that process zettabytes of data. The Group targets Tier-1 customers in data centre, AI, 5G wireless infrastructure, data networking, autonomous vehicles and solid-state storage

· Wherever there is a high-end compute, networking or storage solution, Alphawave IP addresses the high-end connectivity need

· Management believes that Alphawave IP, as a Canadian and British company, is the only non-U.S. company licensing this technology, serving customers globally in North America, China, South Korea, Europe-anywhere high-speed wired connectivity is needed

Leading-edge technology

 · The Group focuses on the design and development of digital signal processing (DSP)-based, multi-standard wired connectivity silicon IP solutions. The Group is solely focused on high-speed connectivity IP solutions, and believes it is able to develop these solutions more cost effectively than internal teams at large semiconductor and system companies

· The Group is a global leader in the most advanced technologies – 7nm, 6nm and 5nm manufacturing technologies – and is in development with more advanced technologies. The Group expects to develop high-speed connectivity IP in 4nm and 3nm with its leading foundry partners. Since its founding, the Group’s solutions have repeatedly established benchmarks in the industry in terms of performance, power consumption, size and flexibility

· The Group has a track record of winning global Tier-1 customers and achieving repeat business with these customers. This successful “land and expand” strategy demonstrates the stickiness of the Group’s solutions with these customers

· Alphawave IP is an approved provider with TSMC and Samsung, the world’s two leading third-party foundries, which represent the majority of third-party manufacturing capability globally at 7nm and beyond. These close relationships with TSMC and Samsung ensure that customers can seamlessly integrate the Group’s IP solutions into their own semiconductor products

Led by a team of seasoned semiconductor and connectivity IP experts

 · Alphawave IP’s three co-founders, Tony Pialis, Jonathan Rogers and Raj Mahadevan, and its Executive Chairman, John Lofton Holt, have worked together for nearly 20 years across numerous global wired connectivity IP and semiconductor OEMs including Intel and Gennum in the United States and Canada

· The management team have an extensive track record of successfully building semiconductor and hardware companies with a particular focus on connectivity IP, raising and deploying over USD 300 million across four semiconductor companies that have generated nearly USD 3 billion in aggregate value since 2004

Demonstrated rapid growth in revenue and profitability

 · During the year ended 31 December 2020, the Group generated revenue of USD 32.8 million, exhibiting robust growth and delivering a CAGR of 161 per cent. since the year ended 31 May 2018. The Group’s bookings from contracts entered into during the year ended 31 December 2020 were USD 75.0 million (of which USD 23.1 million represents Alphawave IP’s estimate of future royalties), as compared to USD 27.2 million (of which USD 3.8 million represents Alphawave IP’s estimate of future royalties) from contracts entered into during the year ended 31 December 2019

· This rapid bookings growth has continued into the current year, and the Group achieved USD 82.2 million in bookings (of which USD 7.9 million represents Alphawave IP’s estimate of future royalties) from contracts entered into during the three-month period ended 31 March 2021. The Group’s operating profit increased significantly over these years, reaching USD 17.5 million in the year ended 31 December 2020 and achieving a CAGR of 207 per cent. since the year ended 31 May 2018

· The Group has an efficient cost base, low capex requirements and is able to drive high gross margins and profitability, given its focus on the high-end segment of connectivity IP. As a result, the Group is highly profitable and enjoys high margins across the business, including gross margin in excess of 95 per cent. and EBITDA margin of 53.9 per cent. during the year ended 31 December 2020

John Holt, Executive Chairman of Alphawave IP, said: “Alphawave IP is a global semiconductor IP pioneer and deep technology company founded on research and development. We focus on developing IP to solve the most difficult connectivity challenges – that have been created by the enormous growth of data processing – in networks and infrastructure around the world. Our growth is driven by continuous technological advances in smart devices and networks, which means all sorts of everyday products – from automobiles to 5G data networks – will require enhanced connectivity to communicate with each other and operate efficiently. Our solutions are built to help meet and support these ever-expanding data demands.

 We are a global business and proud to be taking Alphawave IP public here in the United Kingdom where the Silicon IP business model was invented by great British companies like Arm and Imagination and where there is a deeply experienced semiconductor community. There is a long track record in the UK of investors who understand the value of licencing semiconductor IP.

Our founding team have worked together for nearly 20 years and have a long history of both semiconductor innovation and creating significant value for investors. I am delighted that BlackRock and Janus Henderson will be cornerstone investors and we look forward to the next step in our growth as a public company.”

Tony Pialis, President and Chief Executive Officer of Alphawave IP, said: “Alphawave IP’s technology enables data to travel faster, more reliably, using lower power. Our designs are licensed by makers of silicon chips to enable their chips to communicate with each other. Put simply, our connectivity solutions enable chips to handle the massive amounts of data transmission that happen across all our connected infrastructure, from data centres and computers to wireless infrastructure and autonomous vehicles.

Since we founded the company in 2017, our solutions have repeatedly established benchmarks in the industry in terms of performance, power consumption, size and flexibility. We have achieved a lot in this time: we have some of the world’s leading semiconductor companies as our partners and customers, we have an exceptionally fast-growing revenue track record, and we are a highly profitable company.

We have chosen to come to the UK because of its incredible technology and semiconductor industry ecosystem. The strong research base in the UK – and our new R&D headquarters in Cambridge – offers an excellent foundation for the next stage of our global growth. There is a deep pool of knowledge, experience, and talent.

I am very proud of what our global team has accomplished together to get to this milestone. Now we will focus on the next stage of our journey to bring advanced connectivity solutions to the next generation of advanced semiconductors.”