Chinese Chip Designer Bestechnics Pre-IPO Subscription Exercise Fetches $745m

Bestechnic (Shanghai) Co., Ltd, a fabless IC company with a focus on smart audio system-on-a-chip (SoC), has raised 4.86 billion yuan ($745 million) ahead of an initial public offering (IPO) on China’s Nasdaq-style STAR Market.

The company, which filed for its IPO on Wednesday, offered 30 million shares at 162.07 yuan ($25 million) apiece for its IPO subscription exercise before the listing, according to a filing with the Shanghai Stock Exchange.

Bestechnic will use the IPO proceeds for IC chip development projects, research centre construction, as well as technology innovations, it said.

Beijing Financial Holdings Group-backed China Securities served as the lead underwriter for the deal. Bestechnic will float the shares under the symbol “688608”.

The Shanghai-headquartered company leverages novel technologies such as ultra-low-power RF technology and always-on voice AI to design intelligent chips for earphones and smart speakers. Revenue is primarily from headsets, which accounted for 93 per cent of annual revenues in the last four years.

According to its prospectus, Bestechnic clocked 669 million yuan ($103 million) sales earnings over the first nine months of 2020 — a 40.41 per cent year-on-year growth. During the same period, its net profit stood at 117 million yuan ($18 million), up 165.39 per cent, compared with 2019.

It counts a slew of global smartphone and audio product giants as top clients — including Huawei, Xiaomi, Samsung, Harman, Sony, and JBL. 

After the IPO, the company’s CEO Run Yuan I, will become the largest shareholder in Bestechnic holding 11.35 per cent stake followed by its president Xiaodong Tang with 11.30 per cent equity interest. 

Its major shareholders will include Xiaomi’s joint fund Yangtze River Xiaomi Industry Fund (3.49%), Alibaba (2.79%), Oriza Holdings’ IC focused investment arm Oriza Hua (0.84%), and Shenzhen Capital Group (0.40%).

Xiaomi, Alibaba, Oriza Hua, Shenzhen Capital along with other investors had made an undivulged investment in Bestechnic in 2019. Bestechnic’s portfolio backers also included PE firm Jundu Investment, AIoT innovation platform Arm Accelerator, and Tsinghua Holdings’ THG Ventures.