Since the beginning of 2010, there have been 176 applications for IPOs on Wall Street. Not a large number but a 45% rise over 2009. Moreover, the technology sector leads the IPO charge with 24% of the applications, according to Renaissance Capital.
In this positive climate, private equity funds Blackstone, Carlisle, Permira and TPG are gambling big on bringing giant chipmaker Freescale back to Wall Street. Freescale, which only became a private company in 2006, when it was the largest leveraged acquisition in the history of high-tech. But the company encountered financial difficulties during the global crisis and at the end of the second quarter of 2010 carried debt of $7.6 billion and accumulated losses of $4.6 billion.
As the company again seeks to go public it has implemented streamlining, large-scale layoffs including 20% of its Israel workforce. Last week "Bloomberg" reported that the company is talking with an investment bank.
Two Israeli chipmakers - Wintegra Inc. and Provigent Ltd. - are watching developments at Freescale before deciding on their own planned IPOs on Nasdaq.
Wintegra, which develops chips for wirless communications, has already submitted a prospectus this year for an IPO to raise $115 million on Nasdaq at a market value of $300-400 million. Genesis Partners VC Fund founding and managing partner Eddy Shalev said, "If Freescale is greeted enthusiastically by the market it is clear that that can stimulate the IPO. It will show that the market is ready for IPOs and that specific sector for companies that have the appropriate revenue.
Genesis Partners is one of the investors in Wintegra.
Wintegra recently reported impressive financials in the second quarter of 2010. The company reported revenue of $14 million, up 113% from the corresponding quarter, and up 20% from the preceding quarter. The company also moved from loss to profit.
However, the company's history arouses fears. In 2006, the company planned an IPO but withdrew its prospectus because of the recommendations by banks to reduce its market value. In the volatile market of today, Wintegra could find itself confronted by a similar dilemma.
Wintegra is not the only Israeli company looking at Wall Street and hoping for the best. Provigent, which develops chips for communications networks between cellular servers and backhaul networks is not as far along the line to an IPO.
Provigent ended 2009 with revenue of $25-30 million and profits and is in a growing and hot market.
Both Provigent and Wintegra could have their IPOs before the end of the year but a lot will depend on the fate of Freescale's planned IPO.
Published by Globes, Israel business news - www.globes-online.com - on September 6, 2010
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