Alphawave’s shares in London plunged more than 50 per cent on Wednesday, after the FT published an article record the close ties of the semiconductor company with key contract partners.
The Toronto-based chip IP group £ 856 million raised in an IPO in May, the company valued more than £ 3 billion, making it the most valuable semiconductor company in London.
The Canadian company lends its intellectual property to chipmakers and makes comparisons with Cambridge-based chip architecture firm Arm, which acquired SoftBank in 2016 for £ 24bn.
Alphawave last week showed a strong increase in bookings in the first half of the year, up 492 percent year-on-year to $ 196 million, with the majority arising from contracts with two Chinese companies.
An FT Alphaville article published on Wednesday indicates that one of these – VeriSilicon – has links to Alphawave that were not disclosed in its prospectus for the exchange. VeriSilicon’s founder and chairman, Wayne Dai, is the brother-in-law of Sehat Sutardja, who sits as executive director on Alphawave’s board and is also a major shareholder.
VeriSilicon describes its contract with Alphawave as a transaction with a related party in a Shanghai Stock Exchange Announcementand noted that Dai and his brother had to withdraw from the board when voting on the deal, to avoid a conflict of interest.
In a statement, Alphawave said it had complied with all its disclosure requirements “before, during and since the exchange, and will continue to do so”.
“The company strongly rejects any allegation of lack of transparency and has carried out its financial reporting in full compliance with its obligations,” the company added.
Alphawave’s share price closed 51% on Wednesday, with its market capitalization up to £ 1.2bn after the fall. Its shares have now fallen by 56% from their IPO price in May.
In a statement to the market after the drop in the share price, it added: “All transactions with related parties have been properly disclosed in our IPO prospectus and in our interim results announced last week.”
The chairman and co-founder of the group, John Lofton Holt, is also the chairman and founder of another semiconductor company called Achronix, which is a customer of Alphawave. Achronix was to be listed earlier this year through a merger with a US specialty sourcing company.
However, the merger with ACE Convergence Acquisition Corporation was halted in July after the SEC began investigating ‘certain disclosures’ in its prospectus. ACE revealed during quarterly results published last month that the investigation is ongoing.