IQE places new shares to raise £95m

Pursuant to the authority granted at its annual general meeting on 13 June, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK has placed 67,941,581 new ordinary shares of 1 pence each at a price of 140 pence per share, to raise gross proceeds of about £95m.

The placing (to institutional investors only) represents about 9.9% of IQE’s existing outstanding issued share capital. Application for admission of the placing shares to trading on the AIM market of the London Stock Exchange will be made in due course and they are expected to commence trading on 16 November, when the placing is expected to settle. IQE has agreed to a lock-up of 90 days following completion of the transaction.

Following the issue of the placing shares, the firm’s enlarged issued ordinary share capital will be 754,756,394 voting ordinary shares. Canaccord Genuity Ltd, Stifel Nicolaus Europe Ltd and Peel Hunt LLP acted as joint bookrunners in relation to the placing.

IQE says that rationale for the placing and use of proceeds is as follows:

• IQE is seeking funding to enable it to scale the business to capture multiple high-growth mass-market opportunities.
• The placing will allow the accelerated expansion of IQE’s capital expenditure program in its new epi-foundry in Newport, South Wales, UK, with the purchase of up to 40-60 new metal-organic chemical vapor deposition (MOCVD) systems over the next 3-5 years.
• The additional capacity should enable IQE to address multiple high-growth, mass-market opportunities, including its position in the production of vertical-cavity surface-emitting laser (VCSEL) wafers for 3D sensing consumer electronic applications as well as multiple other consumer applications and platforms.
• IQE is seeing material demand for its VCSEL wafers from a leading global consumer electronics company for use in one of its mass-market consumer products. In conjunction with multiple other customer engagements, IQE expects this demand to increase as its technology is applied across multiple consumer applications and platforms.
• IQE should be able to accelerate the development of new products and technology, while protecting and enhancing its position in a fast-moving marketplace.
• The placing will allow the firm to de-gear and should enhance its financial strength and ability to supply global tier-1 OEMs (both existing and new customers).
• In conjunction with the Cardiff City Deal, the placing should allow IQE to generate incremental sales.

On 20 October, IQE confirmed that a strong third-quarter 2017 saw continuing growth, driven largely by the ongoing VCSEL ramp for a mass-market 3D sensing technology. Should the VCSEL ramp continue along its current growth curve during Q4, then there is potential for full-year 2017 earnings to exceed current expectations, says IQE.

“Compound semiconductors are the fundamental enabler of innovations such as wireless connectivity, 3D sensing, biometric sensors, electric and autonomous vehicles, high-speed wireless and optical communications, and advanced manufacturing,” notes CEO Drew Nelson.