LONDON Avago Technologies -- the chip spin-off of Agilent-- priced shares in its initial public offering at the top of the estimate range and sold 20 percent more than expected, encouraging the whole IPOs mood that could lead to further offerings by private equity groups.
The Avago IPO is second biggest in U.S. this year, and raised $648 million.
Avago, headquartered in Sigapore, is partly owned by private-equity firms Silver Lake Management Company and Kohlberg Kravis & Roberts & Co, had expected to sell 36 million shares for between $13 and $15 each, according to a recent regulatory filing. In fact 43.2 million shares were placed at $15.
All of the additional 7.2 million shares being sold are coming from the company’s backers, mainly Kohlberg Kravis Roberts & Co. and Silver Lake, as opposed to Avago itself.
The company said in a recent regulatory filing it planned to use about 45 percent of its share of the IPO's proceeds to pay down its debt.
Avago saw revenues fall 14.8 percent to $693 million in the six months ended in May 2009 compared to a year earlier. But it may have benefited from the recent rally in semiconductor stocks: the PHLX Semiconductor Index has jumped 60.8 percent since lows hit in early March.
At the $15 level, the investment group’s remaining stake would be valued over $2 billion. On paper at least, it all adds up to easily more than double the equity they put into Avago’s $2.7 billion buyout in late 2005.