[IPO] Subscription Slump at OpenEdge, FIs Favor Long-Term Investment Sentiment

VCs Hold Long-Term Stakes Even After Lock-Up Period Ends
Atinum, Stonebridge, Innopolis, and Others Draw Attention for Investment Performance

Sung Hyun Lee, CEO of Open Edge Technology

[Asia Economy Reporter Kwangho Lee] Semiconductor intellectual property (IP) company Open Edge Technology is set to be listed on KOSDAQ on the 26th, drawing attention to the movements of major financial investors (FIs). Most of their shares are under lock-up agreements, so the exit results will only be known after some time, but it is expected that many FIs will hold their shares for the mid to long term.

According to the investment banking (IB) industry on the 22nd, most of the shares held by Open Edge FIs are currently locked up. In particular, venture capitalists (VCs) hold a relatively high percentage of shares. Although it varies by fund, the lock-up period is generally set at one month for voluntary lock-up and three months for mandatory lock-up.

Open Edge Technology has raised funds in three major rounds. In May 2018, it held a Series A round and raised 3 billion KRW. Then, in February 2020, it raised 10.5 billion KRW in Series B, and in May 2021, 31.4 billion KRW in Series C, totaling 44.9 billion KRW. It attracted attention as major VCs became shareholders.

The funds used for investment include ▲ Innopolis Public Technology-Based Fund and Innopolis 2020 Science and Technology Growth Fund (Innopolis Partners) ▲ NHN Investment-DH Investment Association (NHN Investment) ▲ Stonebridge Young Frontier Investment Association, Stonebridge 2020 Venture Investment Association, Stonebridge DNA Innovation Growth Investment Association (Stonebridge Ventures), among others.

The post-IPO shareholding ratio of these funds exceeds 30%. In particular, Atinum Investment (7.59%), Stonebridge Ventures (5.44%), and Innopolis Partners (4.33%) hold significant shares. Adding strategic investors (SIs) such as Korea Development Bank, Hyundai Motor Company, and SK Hynix, the investors’ total shareholding reaches as high as 44%.

Generally, many investors exit once the lock-up period expires, but it is expected that the FIs invested in Open Edge will hold their shares for the mid to long term. An industry insider said, “Currently, VCs are considering long-term investment. While individual decisions on holding or selling will depend on market conditions, overall confidence in the company’s long-term growth potential is high.”

Open Edge is on the verge of listing. According to the lead underwriter Samsung Securities, the general public subscription competition rate for Open Edge was 78.2 to 1. The total subscription deposit amounted to approximately 330.8 billion KRW.

Earlier, the demand forecast recorded a competition rate of only 44.3 to 1, which led to a sluggish subscription rate. More than 80% of institutions participating in the demand forecast offered prices below the lower end of the desired public offering price range of 15,000 to 18,000 KRW. Consequently, Open Edge lowered the public offering price by more than 30% to 10,000 KRW and proceeded with the general subscription.

As a result, the public offering amount decreased to 33.9 billion KRW, and the market capitalization dropped to 208.7 billion KRW. The circulating shares ratio fell to about 25.5%, and the sale of existing shares was reduced by 47%. The results were below expectations. FIs may find it more advantageous to hold shares rather than sell many existing shares in the public offering market, aiming to increase profits through stock price appreciation after listing.

Open Edge designs and develops AI semiconductor IP based on its proprietary core technology. It has signed more than 30 license agreements, including with global top-tier fabless companies. AI semiconductors include neural processing units (NPUs) and AI accelerators. NPUs are products that apply the process of signal transmission by nerve cells, mimicking brain neurons, to semiconductors.

The funds raised through this listing will be used for research and development and acquisitions of other companies. First, 25.6 billion KRW will be invested in developing high-performance server PHY IP, autonomous driving NPU v.3.0, and 2.5D chiplet technology. Additionally, 4.8 billion KRW will be used to acquire companies that can create synergy with existing businesses.