UK chip maker valued at £2bn as it eyes float
Nvidia rival Graphcore on path to London listing
BRISTol-based company Graphcore has raised another £162m from investors, setting pulses racing that the chip designer could be heading for a london flotation.
The latest round of funding values the firm at £2.1bn, with institutional investors ontario Teachers’ Pension Plan, Fidelity and Schroders all taking stakes for the first time.
Existing investors including Baillie Gifford and Draper Esprit also joined the fundraising.
The move comes less than a year after Graphcore raised £116m, and leaves the four-year old company with £321m in cash to play with.
The money will be used to take on more employees and open an office in Japan.
Graphcore makes high- end chips that can be put into computers to make them faster at crunching data.
The chips accelerate machine learning, otherwise known as artificial intelligence.
They are currently used in driverless cars, traffic management systems and drug development. Customers include Dell, Microsoft and Samsung.
There is growing excitement surrounding the company, which was founded in 2016 by experienced techies Nigel Toon and Simon Knowles, amid hopes that it might become the UK’s next Arm.
Toon believes the firm could look to list in london by 2022 and has been sounding out investment banks.
He said: ‘We would love to list in london but we’ll go when we are ready. All our new investors typically invest in publicly listed companies.’
But Toon said that before a initial public offering ( IPo) he would like to see changes around the rules on dual class share structures, which are banned for premium listings in the UK.
He added: ‘There needs to be an open discussion, otherwise another company can just swoop in and buy the company before you’re ready.’
As a result of the restrictive rules london has struggled to attract the world’s best tech companies, pushing them to list in New York and Asia.
Ministers have hinted that they would look to relax stock market regulations to encourage firms to list in london after Brexit.
Michael Gove, minister for the Cabinet office, said this week: ‘There are ways we can regulate financial services in a smarter way to ensure it is easier for companies to list here.’
Toon admitted that in 2021 Graphcore must get back on track after a difficult period struggling with the pandemic.
He said: ‘Business has taken longer, signing new customers in particular, but hopefully things will come to fruition next year.’
He added: ‘ Revenues have not been at the level we had hoped and some projects have been delayed.’
Its annual report for 2019 shows a loss of £71m, which was up from £45m in 2018, with revenues of £7.5m.
Toon and Knowles met in 2002 and formed Icera, a business making chips for 3G mobile network infrastructure. Icera was sold to the US chip maker Nvidia in 2011 for £272m.
Toon is outspoken about Nvidia’s £30bn swoop for Arm this year and believes the deal should not take place on competition grounds.
He said: ‘The deal is bad for technology, it is anti-competitive and needs to be looked at. It is bad for competition and bad for the industry.’