Intel-backed Astera seeks US$534 million in IPO with AI appeal

ASTERA Labs and its investors are seeking to raise as much as US$534 million in an initial public offering as the Intel-backed semiconductor connectivity company seeks to tap investor demand for artificial intelligence plays.

Astera plans to sell about 14.8 million shares, while existing shareholders are offering another three million, the Santa Clara, California-based company said on Friday (Mar 8) in a regulatory filing. The stock is being offered at US$27 to US$30 a share, the filing shows.

At the top of that range, the company would have a market value of US$4.5 billion based on the outstanding shares listed in its filings. Including stock options and restricted share units, Astera would have a fully diluted value closer to US$5 billion.

The listing is set to be the biggest by a tech company since Klaviyo’s US$659 million IPO in September. While that and British chip designer Arm Holdings’ US$5.23 billion offering – 2023’s biggest – failed to restart the listing engine, the market has warmed up substantially this year, led by Amer Sports’ US$1.57 billion IPO.

Social-media company Reddit is planning to move ahead with its long-dormant listing, too. It’s planning to begin marketing its shares on Monday and is eyeing a valuation of as much as US$6.5 billion in an IPO this month, Bloomberg News has reported.

Klarna ‘soon’

Klarna Bank, the Swedish fintech that was once Europe’s most valuable startup, is moving forward on a potential US listing that could be one of the largest IPOs this year, Bloomberg reported last month. Klarna chief executive officer Sebastian Siemiatkowski said on Friday in a Bloomberg TV interview that he is preparing for an IPO “quite soon.”

Founded in 2017, Astera develops semiconductor-based connectivity solutions with the aim of enabling the “mainstreaming” of AI and machine learning in the cloud, according to its website.

Astera tapped into investor bullishness on AI as part of a 2022 funding round led by Fidelity Management & Research that raised US$150 million at a US$3.15 billion valuation. The company’s investors include Intel’s venture arm.

Nvidia and other AI-related stocks have soared over the past year, helping to lift stock indexes to record highs.

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Shrinking losses

In 2023, Astera cut its net loss to US$26 million on revenue of US$116 million, compared with a loss of US$58 million on revenue of US$80 million the previous year, according to its filings.

Astera’s biggest shareholder is Sutter Hill Ventures, which will control 12.8 per cent of the company’s stock after the listing. Funds affiliated with Fidelity will have a 6.5 per cent stake, the filings show.

The IPO is being led by Morgan Stanley and JPMorgan Chase, with participation from Barclays, Deutsche Bank, Evercore, Jefferies Financial Group and six other banks. Astera is planning for its shares to trade on the Nasdaq Global Select Market under the symbol ALAB. BLOOMBERG