Alphawave’s London-listed shares crashed more than 50 per cent on Wednesday, after the FT published an article flagging the semiconductor company’s close links to key contract partners.
The Toronto-based chip IP group raised £856m in an IPO in May, valuing the company at over £3bn and making it the London stock market’s most valuable semiconductor company.
The Canadian company licenses its intellectual property to chip manufacturers, invoking comparisons with Cambridge-based chip architecture firm Arm, which SoftBank acquired for £24bn in 2016.
Alphawave last week reported a strong increase in bookings in the first half of the year, rising 492 per cent year-on-year to $196m, with the majority stemming from contracts with two Chinese businesses.
An FT Alphaville article published on Wednesday flagged that one of these — VeriSilicon — had ties to Alphawave that were not disclosed in its IPO prospectus. VeriSilicon’s founder and chairman, Wayne Dai, is the brother-in-law of Sehat Sutardja, who sits on Alphawave’s board as an executive director and is also a key shareholder.
VeriSilicon described its contract with Alphawave as a related-party transaction in a Shanghai stock exchange announcement, noting that Dai and his brother had to recuse themselves from the board when the transaction was voted on, to avoid a conflict of interest.
In a statement, Alphawave said it had met all its disclosure requirements “before, during and since the IPO, and will continue to do so”.
“The company strongly refutes any accusation of a lack of transparency and has performed its financial reporting entirely in line with its obligations,” the company added.
Alphawave’s share price closed down 51 per cent on Wednesday, with its market capitalisation slumping to £1.2bn following the fall. Its shares have now dropped 56 per cent from their IPO price in May.
In a statement to the market after the share price drop it added: “All related party transactions have been properly disclosed in our IPO prospectus and in our interim results which were released last week.”
The group’s chair and co-founder John Lofton Holt is also the chair and founder of another semiconductor company called Achronix, which is a customer of Alphawave. Achronix was due to list in the US earlier this year via a merger with a special acquisition company.
The merger with ACE Convergence Acquisition Corporation was called off in July, however, after the SEC began investigating “certain disclosures” made in its prospectus. ACE disclosed during quarterly results published last month that the investigation was ongoing.