6 January 2021
AXT’s second-tranche private equity investment in China largely complete
AXT Inc of Fremont, CA, USA – which makes gallium arsenide (GaAs), indium phosphide (InP) and germanium (Ge) substrates and raw materials – says that the second tranche of the private equity investment in its China-based wafer manufacturing company Beijing Tongmei Xtal Technology Co Ltd was largely completed in December. The second tranche was originally scheduled to fund in January.
In December, seven private equity firms invested about $25m in the second tranche. An additional $1.5m is expected to be invested in January, closing the second tranche at about $26.5m. The first tranche, totaling $22.5m, funded in November. Upon completion of the final $1.5m investment, the capital raise will total about $49m in exchange for a 7.28% minority interest in Tongmei.
Previously, on 16 November, AXT announced 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.
“We are pleased that the second tranche participants accelerated the investment schedule,” says CEO Morris Young. “Their strong support and enthusiasm underscore the exciting applications and customer opportunities for which we are preparing this year, and their investment is an important milestone in Tongmei’s progress toward a STAR Market IPO in 2022,” he adds.
The process of going public on the STAR Market includes several periods of review and is therefore a lengthy process. Tongmei does not expect to accomplish this goal until mid-2022. AXT has posted a brief summary of the plan and the process on its website. The listing of Tongmei on China’s STAR Market will not change the status of AXT Inc as a US public company, which will continue to be listed on the Nasdaq Global Select Market under the symbol AXTI.