Belgian-German chipmaker X-Fab plans US$530mil IPO

FRANKFURT: German-based chipmaker X-Fab Silicon Foundries SE is raising about 500 million euros (US$530mil) via an initial public offering in order to fund its global production expansion.

The company with headquarters in Erfurt, central Germany, said it intends to list shares on the Euronext Paris exchange. It is majority-held by its Belgian founders, including chief executive officer Rudi De Winter. X-Fab’s semiconductor wafers go into chips designed by its customers for car dashboards, factory floors, doctors’ offices and smartphones.

BNP Paribas SA and HSBC Bank PLC are leading the offering, with Credit Suisse Group AG, Commerzbank AG and Frankfurt’s Oddo Seydler Bank AG also acting as underwriters.

The company studied listings in Germany, Belgium and France before choosing Paris because of its investor base and proximity to a major plant, X-Fab CEO Winter said in an interview.

The Malaysian state of Sarawak, whose Sarawak Technology Holdings owns 35% of X-Fab, plans to sell some of its shares in the IPO, and Japanese electronics company TDK Corp subsidiary TDK-Micronas with 2%, will also sell all of its shares, De Winter said.

The IPO will be priced later this month. De Winter and his two partners hold 61% of the company and plan to hold onto their shares, he said.

As manufacturers of digital chips that handle the most computing-intensive tasks in PCs and mobile devices move to more sophisticated production processes, X-Fab has been buying up their older factories.

It has been converting them to turn out its customers’ analog “mixed signal” chips that can be used to sense rain on a car’s windshield or light its interior when a driver gets in, help detect images in an ultrasound, or read fingerprints on a smartphone’s home button. X-Fab owns six such plants in Europe, Malaysia and the US and plans to use the IPO proceeds to hunt for more production capacity, De Winter said.

“We’re planning US$350mil to US$370mil in investments the next three years and we can finance that with cash flow and bank loans,” he said. “If we have some more cash and leeway we can structure future deals. We want to be ready.”

The planned offering is X-Fab’s second attempt to go public. The company, which is registered in Belgium and was founded by De Winter, his wife Francoise Chombar and Belgian businessman Roland Duchatelet nearly 30 years ago, pulled a planned IPO in 2004. Bloomberg News reported at the time the company sought too high a price, didn’t file an on-time prospectus and Commerzbank pulled out of managing the offering.

De Winter said “quite a few” investors pulled out after terrorist train bombings in Madrid disrupted the company’s roadshow there as it pitched investors.

De Winter, Chombar and Duchatelet hold shares of X-Fab through their investment vehicle Xtrion NV in Belgium. — Bloomberg