Mobileye gains 38% in best start of year for big U.S. IPO

Mobileye gains 38% in best start of year for big U.S. IPO

(Bloomberg) – Mobileye Global Inc., the standalone technology company created by Intel Corp. posted the biggest early-trading gain of 2022 for a major U.S. listing after raising $861 million in an initial public offering at a price above its target range.

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The first-day gain, which would not have been extraordinary by the standards of previous boom times, comes after one of the few initial public offerings in the United States this year to exceed its targets and when many other public companies wait for the market to improve.

Mobileye shares began trading in New York on Wednesday at $26.71 apiece after selling for $21 in the IPO. After rising 42% from the bid price, they closed 38% higher at $28.97, giving the company a market value of around $23 billion.

The company sold 41 million shares on Tuesday after trading them between $18 and $20, making it the fourth of 199 in the United States this year to price its IPO above the target range. , according to data compiled by Bloomberg.

While Mobileye’s market value tops the $15.3 billion Intel paid for Mobileye in 2017, it still falls short of the $30 billion valuation the company had sought earlier, Bloomberg News reported. . Along with the listing, General Atlantic has agreed to purchase $100 million of stock in a private placement, according to documents Mobileye has filed with the U.S. Securities and Exchange Commission.

Last year’s record volumes for U.S. and global IPOs fell amid market volatility, inflation fears and geopolitical risks, and poor corporate performance that went public in 2021, which are down 22% on a weighted average. base.

“Possibility of expansion”

“Mobileye’s initial IPO validates investor interest in Mobileye’s growth prospects in the advanced driver assistance systems (ADAS) market,” said Mandeep Singh, senior analyst for Bloomberg Intelligence. “We believe that, similar to the growth of chips in smartphones, the growing demand for computer vision and ADAS systems in automobiles could be a multi-year expansion opportunity in semiconductors.”

Mobileye’s listing success stems from its proven business model and steady growth expectations, Singh said. “Still, it will be difficult for companies without profitability to go public in this market,” he said.

U.S. IPO volume has fallen to around $23 billion since Jan. 1, from $279 billion at this point in 2021, the data shows.

Only two listings in 2022 on US exchanges exceeded $1 billion. Corebridge Financial Inc. raised $1.68 billion in September, while the January listing of private equity firm TPG Inc. brought in $1.1 billion. Last year, 45 companies raised $1 billion or more in IPOs on the New York Stock Exchange and Nasdaq, the data shows.

Waiting for Instacart

Mobileye’s offering is the fourth largest in the United States and could be the last major IPO of the year unless a surprise competitor quickly pivots to a listing. Instacart Inc., another highly anticipated listing, decided not to go public this year after cutting its valuation for the third time, to $13 billion, Bloomberg News reported this month.

Mobileye got off to a good start in a tough year for its semiconductor peers. The Philadelphia Stock Exchange’s semiconductor index has lost 40% of its value this year. But even amid the rout, caused by rapidly declining demand in end markets such as personal computers and smartphones, orders for auto-related chips have held up and shortages persist.

Amnon Shashua co-founded Mobileye in 1999 and helped bring it to the US IPO in 2014. He has served as its chief executive since 2017.

In a letter to shareholders included in the prospectus, Shashua said the company’s driver assistance technology has been used in more than 125 million vehicles. He said he expects the technology to be deployed in an additional 270 million vehicles by 2030.

“While the core of our business today is to make human-driven cars safer, we are working tirelessly to create a future of self-driving vehicles,” Shashua said.

Mobileye said it would use the funds raised for net proceeds for working capital and general corporate purposes, as well as to pay down some debt owed to Intel. In July, it had $774 million in cash and cash equivalents. In the 12 months ended Dec. 25, it had a net loss of $75 million on revenue of $1.39 billion, its filings show.

Intel CEO Pat Gelsinger is looking to capitalize on the Israel-based business, which makes chips for cameras and driver assistance features, and is seen as a valuable asset as the auto industry rushes to fully automated vehicles. But the bright future of self-driving vehicles prophesied by Intel, Waymo and others has crumbled. A world full of robo-taxis seems decades away at best, and the losses for investors who trust the field are mounting.

Intel control

Intel said in its filings that it would continue to own all of Mobileye’s Class B shares, giving it control of the company with 99.4% of the voting rights.

Shashua had indicated interest in purchasing up to $10 million of Class A common stock, according to filings. Baillie Gifford and Norges Bank Investment Management, as lead investors, have expressed interest in buying up to a total of $330 million in shares.

Mobileye’s bid was led by Goldman Sachs Group Inc. and Morgan Stanley. The other 23 underwriters listed in its filings include Evercore Inc., Barclays Plc, Citigroup Inc. and Bank of America Corp.

The company’s shares trade on Nasdaq under the symbol MBLY, the same symbol it used when it first went public in 2014.

(Updates with closing stock price in third paragraph.)

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