Sequans Communications S.A., a fabless supplier of next generation (4G) wireless broadband chipsets, raised $77 million by offering 7.7 million ADSs at $10, below its proposed $11 to $13 range. The offering was downsized from 9.2 million ADSs, with existing shareholders electing to sell fewer shares (1.03 million vs. 2.5 million). Under its original terms, Sequans had planned to raise $110 million.
The Paris, France-based company, which saw its revenue soar more than 3x from less than $20 million in 2009 to nearly $69 million in 2011, is the global leader in WiMAX chipsets for smart phones, portable UBS devices and other embedded consumer broadband devices, having shipped 4.6 million units in 2010. Sequans' industry leading 4G chipset powers Sprint's (S) HTC EVO smartphone, the first mass-market 4G smart phone released in mid-2010. Sequans will list on Friday the NYSE under the symbol SQNS. UBS Investment Bank (UBS) and Jefferies & Co. (JEF) acted as joint bookrunners on the deal.
Mixed trading among recent chip IPOs; secular growth stories are key to success
Over the last 12 months, a total of six chip IPOs have priced (excluding Sequans), ranging from a $63 million offering from China-based analog chip supplier BCD Semiconductor (BCDS) to the $476 million IPO from diversified global chip manufacturer NXP Semiconductor (NXPI). The average overall return is 34%, although individual performance has varied greatly.
The best performers -- NXP Semiconductor (up 130%), high-speed data center and computing chip designer Inphi (up 72%) and China-focused mixed-signal wireless chip vendor RDA Microelectronics (up 50%) -- have seen strong investor interest due to their favorable positions in secular growth markets. On the flip side, the worst performers -- low-cost power management/analog chip manufacturers Alpha and Omega (down 29%) and BCD Semiconductor (down 21%) -- operate in low-margin, commoditized segments of the industry. Interestingly, four of the six chip IPOs highlighted above traded flat to down in their market debuts; only Inphi (28% first day pop) and RDA (19%) managed to produce healthy first day gains for investors.
While Sequans falls in the "secular growth" bucket, the downsized offering indicates that investors remain price sensitive, particularly for small companies exposed to intensifying competition. Intel (INTC), Qualcomm (QCOM) and Broadcom (BRCM) are all aggressively investing in 4G solutions.