Chipmaker Avago Files for a $400M IPO

Sometimes a big juicy IPO is just what the market needs to shake loose from its doldrums. It's hard to tell whether private equity-owned Avago Technologies Ltd.'s upcoming offering will be such a seminal event, but it sure is the biggest deal to consider plying the turbulent public markets in some time.

The former Agilent Technologies Inc. (A) chip unit, which was acquired by Kohlberg Kravis Roberts and Silver Lake Partners for $2.66 billion in 2005, in one of the biggest tech LBOs, filed on Thursday to go public.

The S-1 reads like a who's who of big investment banks. Underwriting the offering are Deutsche Bank Securities, Lehman Brothers, Morgan Stanley, Citi, Credit Suisse, Goldman Sachs, JP Morgan and Banc of America Securities. KKR is also listed. Avago retained Kit Kaufman, Anthony Richmond of Latham & Watkins LLP, while Simpson Thacher and Bartlett LLP's William Hinman is representing the underwriters.

Avago, which is headquartered in Singapore, makes analog chip devices for the industrial and automotive electronics, wired infrastructure, wireless communications and consumer and computing peripherals markets. In the six months ending May 4, 2008, it reported net income of $21 million on revenues of $813 million. In the year-earlier period, it posted net income of $10 million on revenues of $755 million.

Since being carved off of Agilent, itself a spinout of Hewlett-Packard Co. (HPQ), Avago has sold off several units, including its printer chip division to Marvell Technology Group Ltd. (MRVL) for $275 million and its storage chip division to  PMC-Sierra Inc. (PMCS) for $425 million in cash.

It's an unusual time to file for an initial public offering, what with both the semiconductor and the IPO markets in sad shape. But maybe a big IPO is just what the market needs.