Wafer Level Chip Scale Package Ltd. (WLCSP) (SSE: 603005), a subsidiary of Chinese-American company Shellcase Ltd., a developer of processor protection solutions, held its IPO on the Shanghai Stock Exchange today. The company raised $118 million at a company value of $780 million, after money.
WLCSP's share price rose in today's trading to give a market cap of $1.1 billion. Shellcase owns 28% of WLCSP after the IPO, which means that its holding is worth $297 million - not a bad achievement for a company that almost closed ten years ago.
In a Chinese IPO, a company must announce in advance the amount of the offering, and may not increase it during the process. Because demand exceeded the offering, WLCSP's shareholders had to sell an additional 10% of the company. Shellcase sold additional shares for $24 million, which will be distributed as a dividend.
The big beneficiary from the IPO is Infinity Group's Infinity II Fund (in which Len Blavatnik's Clal Industries and Investments Ltd. (TASE: CII) owns 39%). The Infinity II Fund owns 30% of Shellcase, and also owns 8% of WLCSP through a Chinese fund in which it is a partner.
Following the IPO, Infinity II Fund's holding in WLCSP through Shellcase is worth $92 million on paper, plus $7 million in cash. Its holding in WLSCP through the Chinese fund is worth $44 million on paper and $4 million in cash.
Altogether, the expected return of $147 million amounts to 130% of the capital raised by the Infinity II Fund, in just one deal. Clal Industries' share in the deal is around $60 million.
Other Israeli shareholders in Shellcase are Leon Recanati's GlenRock Israel (about 5%, worth $15.4 million on paper and $1.2 million in cash), Ami Dotan's Neurone Ventures (about 10%, worth $30.8 million on paper and $2.4 million in cash), and former Shellcase CEO Shalom Daskal.
Shellcase developed miniature packaging to protect processors from the environment. It was founded in 1993, raised capital from Ampal-American Israel Corporation, General Electric, Motorola, and other companies, but almost collapsed in 2004. The original investors refused to inject additional capital into the company, and it was forced to hold a "rescue" financing round. The company raised $19.4 million from the abovementioned Israeli investors, and Chinese and Korean investors, chiefly China Israel Value Capital (CIVC), and the Korea Global IT Fund (KGIF).
Infinity Group CEO Amir Gal-Or says that, during that financing round, one of the Chinese investors was killed in a traffic accident. Infinity Group decided to inject its share of $4.5 million, which could have been lost had the Chinese investment not arrived. In the end, the investment was made, enabling the round to be completed.
After the financing round, Shellcase completely changed its business model: it founded WLCSP in China and licensed it to manufacture Shellcase's products. Shellcase also sold its R&D center to Tessera Technologies, Inc. (Nasdaq: TSRA) for $33 million. Shellcase was basically a shell company with no activity, but received revenue from the license to WLCSP.
WLSCP's revenue is currently $400 million a year, and its net profit is $30 million. The company wants to reestablish a development center in Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on February 10, 2014
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