AXT Completes First Tranche Private Equity Investment in China
AXT, Inc. announces the completion of the first tranche of a $50 million private equity investment in its wafer manufacturing unit, Tongmei, totaling approximately $22.5 million. The investment is led by three funds within the Haitong Private Equity Group. This funding is part of AXT's strategy to prepare for an IPO on China's STAR Market, with the second tranche of $26.5 million anticipated in January 2021. AXT continues to operate as a publicly traded entity on Nasdaq under the symbol AXTI.
- First tranche of $22.5 million funded for Tongmei, supporting IPO strategy.
- Increased interest from private equity firms signals strong market demand.
- Completion of IPO not expected until mid-2022, indicating potential delays.
- Investment documents for the second tranche have not yet been executed.
STAR Market IPO Process Summary Now Available on AXT’s Investor Relations Website
FREMONT, Calif., Dec. 09, 2020 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates, today announced that the first tranche of the private equity investment in its wafer manufacturing company in China, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), has been fully funded. The first tranche investment totals approximately
AXT previously announced on November 16, 2020 a strategic plan to access China’s capital markets and progress to an initial public offering by Tongmei on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (the “STAR Market”). To qualify for a STAR Market listing, Tongmei is required to have multiple independent shareholders. The first major step in this process is engaging reputable private equity firms in China to invest funds in Tongmei. In exchange for approximately a 7.14 percent minority interest in Tongmei, private equity firms will invest approximately
“We are pleased to have completed the first tranche funding so quickly,” said Morris Young, CEO. “This is an exciting time for our company as the applications and customer opportunities for which we have been preparing over the last two years are now taking shape. The materials we produce are proving to be an essential part of many of the technologies that will define advancements in telecommunications, networking, healthcare, consumer products, and other verticals for many years to come. We believe that our success to date in positioning ourselves for an IPO of Tongmei on the STAR Market reflects the strong market demand for our products and our future growth, as well as our well-established presence in China. We appreciate The Haitong Group’s enthusiasm for our business and its cooperation throughout this process. We look forward to continuing to build a long and positive relationship.”
The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei does not expect to accomplish this goal until mid-2022. Today, AXT has posted on its website a brief summary of the plan and the process. The listing of Tongmei on China’s STAR Market will not change the status of AXT, Inc. as a U.S. public company. AXT is a U.S. company, headquartered in Fremont, California. It will continue to be listed on the Nasdaq Global Select Market under the symbol AXTI.
About AXT, Inc.
AXT is a material science company that develops and manufactures high-performance compound and single element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). The company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells. AXT’s worldwide headquarters are in Fremont, California where the company maintains its sales, administration and customer service functions. AXT has manufacturing facilities in China and, as part of its supply chain strategy, has partial ownership in ten companies in China producing raw materials. For more information, see AXT’s website at http://www.axt.com.
Forward-Looking Statements
The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, for example, statements regarding Tongmei signing investment documents to secure the second tranche of private equity investment funds into Tongmei and subsequently receiving such funds, completing other preliminary steps in connection with the proposed listing of shares of Tongmei on the STAR Market, being accepted to list shares of Tongmei on the STAR Market and the timing and completion of such listing of shares of Tongmei on the STAR Market. Additional examples of forward-looking statements include statements regarding the market demand for our products, our growth prospects and opportunities for continued business expansion, including technology trends and new applications, our market opportunity and ability to compete for business opportunities, elevating our manufacturing, enhancing our business processes and financial structure, our relocation and our expectations with respect to our business prospects and financial results. These forward-looking statements are based upon assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include, but are not limited to: the lack of interest of private equity funds in China to invest in Tongmei, the withdrawal, cancellations or requests for redemptions by private equity funds in China of investments in Tongmei, the timing of receipt of private equity funds into Tongmei, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States. Additional uncertainties and factors include, but are not limited to, the timing and receipt of significant orders; the cancellation of orders and return of product; emerging applications using chips or devices fabricated on our substrates; end-user acceptance of products containing chips or devices fabricated on our substrates; our ability to bring new products to market; product announcements by our competitors; the ability to control costs and improve efficiency; the ability to utilize our manufacturing capacity; product yields and their impact on gross margins; the relocation of manufacturing lines and ramping of production; possible factory shutdowns as a result of air pollution in China; COVID-19 or other outbreaks of a contagious disease; tariffs and other trade war issues; the financial performance of our partially owned supply chain companies; policies and regulations in China; and other factors as set forth in the company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission. Each of these factors is difficult to predict and many are beyond the company’s control. The company does not undertake any obligation to update any forward-looking statement, as a result of new information, future events or otherwise.
Contacts:
Gary Fischer
Chief Financial Officer
(510) 438-4700
Leslie Green
Green Communications Consulting, LLC
(650) 312-9060
FAQ
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