Grenoble, May 25, 2018.
Launch of IPO on Euronext Growth Paris
- Capital increase: approximately €35.7M
- Subscription commitments received: €22.8M, incl. €12.4M through shareholder convertible bonds
- Received subscriptions by new shareholders: Definvest (Bpifrance and French Ministry of the Armed Forces), Financière Arbevel and Alliance Ventures BV (Renault-Nissan-Mitsubishi)
- Indicative price range: between €17.66 and €23.88
- Subscription period: from May 25 to June 6, 2018 inclusive (Open-Price Offer) and from May 25 to June 7, 2018 at midday (Global Offering)
- Company awarded the “Innovative company” label and eligible securities PEA-PME
Kalray, a pioneer in processors for new intelligent systems, has announced the launch of its initial public offering to list its company shares for trading on the Euronext Growth market in Paris.
On May 24, 2018, the French Financial Markets Authority (AMF) has granted the visa number 18-196 on the prospectus made up of the “Document de Base” registered under no. I.18-042 on May 16, 2018 and a securities note (including a summary of the prospectus).
The pioneer of intelligent processors
Founded in 2008, as a spin-off of the leading French national lab CEA (“Commissariat à l’Énergie Atomique”, the French Alternative Energies and Atomic Energy Commission) and the outcome of nearly 10 years of R&D and significant investment in the order of €60M, Kalray designs and markets a new generation of “intelligent” processors. Intelligent processors, firmly protected by 23 patent families , have the capability to analyze on the fly, and in an intelligent manner, a very large flow of information, and to react and make decisions in real time. These intelligent processors are being extensively deployed in fast-growing sectors such as next-generation computer networks, autonomous vehicles, healthcare equipment, as well as drones and robots.
Based on its “MPPA®” (Massively Parallel Processor Array) architecture, which is unique and patented, and which allows for the miniaturization of a supercomputer on a single chip, the Kalray intelligent processors offer a set of performance criteria that address the challenges raised by the new generation of intelligent systems, namely:
- considerable computing power, equivalent to 2,000 mainstream computers
- very low energy consumption suited to integration into confined embedded systems
- data analysis on the fly and in a deterministic manner
- the capacity to process a large number of critical functions simultaneously
- upstream integration of security in the design process thanks to technical partnerships with a number of leaders in the aerospace and defense sectors
- an open and easily programmable system
Disruptive technology key for intelligent data centers and intelligent cars
The company has evolved in two stages. The first stage was the development and refining of the technology, which was carried out until 2014. In the second stage, from 2015 onwards, the company has been focusing on two high-potential growing markets, intelligent data centers and intelligent cars, in order to build a competitive offering for each one.
These two high-growth markets, forecasted to grow by over 50% per year for the next five years, open up business opportunities in the very short term (as early as 2019 for data centers) and in the medium term (starting in 2021/2022 for intelligent vehicles).
For data centers, Kalray’s KTC (“Kalray Target Controller”), an intelligent storage solution, has just been certified by an independent certification body in April 2018, a prerequisite to launch volume production of the solution. For intelligent cars, major technological choices will be made by both manufacturers and component suppliers over the next 18 months. This is borne out by the fact that the intelligent Kalray processor has already been integrated into the SYMBIOZ concept car, released by Renault at the end of 2017 and designed to process several critical algorithms related to autonomous driving.
Products endorsed and supported by leading manufacturers
On the market of data centers, three server manufacturers are currently in the integration phase of the Kalray solution and the qualification of their own product for a launch in early 2019. The Kalray solution is also being evaluated by other very large storage server and data center manufacturers, global leaders which may design in Kalray’s technology over the next few months for very high-volume production from 2020 onwards.
On the market of intelligent cars, the Kalray processor is currently in the evaluation phase with seven potential customers, including five car manufacturers out of the top 10 worldwide. It is also integrated into a project aimed at defining a new electronic architecture for all vehicles of one the top-3 global automobile manufacturers.
This momentum is reflected in the strong financial and strategic backing of industry leaders. The leading venture capital funds who have committed to supporting Kalray (ACE Management, CEA Investissement, EUREKAP! and Inocap Gestion) were joined in 2017 by the Safran investment fund, MBDA (the joint-venture between Airbus, BAE Systems and Leonardo), the Asian investment fund Pengpai and, more recently, the Renault-Nissan-Mitsubishi Alliance Ventures and the Definvest fund managed by Bpifrance on behalf of the French Ministry of the Armed Forces. These endorsements firmly validate the Kalray technology, but they also vouch for its strategic interest for these key players beyond business prospects.
The Stock Exchange market with a €100M revenue target for 2022
The company has begun to market its processors so that its customers and prospects may validate the Kalray technology and later design it into their own products. It is now ready to enter a new development phase: the commercial ramp-up, on a large scale, of products fitted with Kalray processors from 2019 onwards. The company target for 2022 is revenue in excess of €100M and a breakeven restated operating income by 2020.
Kalray relies in particular on an agile organization and the ability to easily switch to large-scale production thanks to a fabless business model, allowing the outsourcing of its production, namely to world-leader TSMC.
Thus, the net proceeds of the raised funds to be subscribed in this transaction (estimated at €21.2M for a total fundraising of €35.7M in mid-range) will provide the company with the financial means necessary to implement its strategy, namely:
- 60%, approximately, to finance the Company’s product roadmap, especially do develop and place on the market new generations of intelligent processors, including Coolidge 1 from 2019
- 40%, approximately, for large-scale commercial deployment that includes the growth of the sales team as well as the working capital requirements as per a strong increase in revenue
Important subscription commitments received
Kalray has received subscription commitments for a total amount of €22.8 M, which corresponds to 63.8 % of the capital, increase, including:
- €6.3M in cash from current shareholders (CEA Investissement, Helea, Compagnie du Planay, Inocap Gestion, Safran Corporate Ventures)
- €4M in cash from new shareholders (Bpifrance/Definvest et Financière Arbevel)
- €12.4M through offset of receivables related to the repayment of the convertible bond loan issued in April 2018
Should the Offer be limited to 75 % of its initial amount, the subscription commitments would represent 99.9% of the transaction, which might have an impact on the liquidity of the shares.
Availability of the Prospectus
Copies of the prospectus as approved by the AMF on May 25, 2018 under visa number 18-196, which is made up of the “Document de Base” registered by the AMF under no. I.18-042 and a securities note (including a summary of the prospectus), are available free of charge, and on request, from the company headquarters, 180, avenue de l’Europe, 38330 Montbonnot-Saint-Martin, France, and on the Kalray (www.kalray-bourse.com) and AMF company websites (www.amf-france.org).
The company draws the attention of the public to Chapter 4 (“Risk factors”) of the prospectus registered with the AMF, especially in relation to dependent patents (section 4.5.1), as well as to Chapter 2 (“Risk Factors related to the Offer”) of the securities note, especially those risks related to a shortage of subscriptions which may shift the company’s development plan, and possibly its objectives too.
Financial intermediaries and counsels
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Find out more on www.kalray-bourse.com
Company’s share capital before the transaction
Limited company whose share capital amounts to €23,593,710 as divided into 2,359,371 shares.
Euronext Growth – ISIN: FR0010722819- Mnemonic: ALKAL
Indicative price range
Between €17.66 and €23.88 per share
Terms of the offer
A maximum of 1,718,826 new shares that may be increased to a maximum of 1,976,649 shares if the full extension option is exercised and a maximum 2,273,146 shares in case the full over-allotment option is exercised.
Gross amount of the transaction
Approximately €35.7M of the gross proceeds from the issuance of new shares (including €12.4M through offset of receivables and €23.3M in cash) that may be increased to a maximum of €41.1 if the full extension option is exercised and a maximum of €47.2M in case the full over-allotment option is exercised (on the basis of the median price of the indicative price range, i.e. €20.77 per share).
Net amount of the transaction
The net proceeds of the fundraising amounts to €33.6M in mid-range (without exercising the extension or over-allotment option), made up of:
- €12.4M by incorporating the receivables stemming from the anticipated repayment of the convertible loan issued in April 2018
- And €21.2M paid out in cash
- a retail public offering in France carried out as an Open-Price Offer (OPO), mainly proposed to private legal persons
- a global offering mainly intended for institutional investors, in and outside of France (except, notably, the United States, Canada, Japan and Australia)
If there is sufficient demand in the Open-Price Offer (OPO), the final number of shares allocated in response to orders placed under the terms of the OPO shall amount to at least 10% of the initial amount of the capital increase (excluding the potential exercise of the extension and over-allotment options).
The orders will be broken down based on the requested number of shares:
- Fraction of A1 order: 1 to 150 shares
- Fraction of A2 order: over 150 shares
The fractions of the A1 order will be given preferred treatment in comparison to fractions of the A2 order in the event that all the orders cannot be met.
The total of subscription commitments received by the company amounts to €22.8 M, which is broken down as follows:
2018 OC holders have committed to placing a subscription order to the amount of receivables they will hold after the anticipated repayment of the 2018 OCs (accrued interest and non-conversion premium included), namely €12.4M, i.e. 34.7 % (excluding the exercise of the extension and over-allotment options, on the basis of a price matching the midpoint of the indicative price range of the Offer price, i.e. €20.77). These irrevocable commitments will be exclusively carried out by offsetting receivables, bearing in mind these orders will met fully and as a priority. The profit of a conversion premium highlights a disparity of prices which amounts to a 17.4 % discount from the Offer price (mid-range price).
On May 24, 2018 when the prospectus was approved, five company shareholders have irrevocably committed to subscribe to the increase in capital up to a total amount of €6.3M, which represents 17.7 % of the current capital increase.
On May 24, 2018 when the prospectus was approved, two company investors that are not company shareholders have irrevocably committed to subscribe to the increase in capital up to a total amount of €4M, which represents 11.2 % of the current capital increase.
Company’s lock-up commitment
- Company’s lock-up commitment: 180 days
- Share conservation commitment
Shares in question:
- 1% of existing shares prior to the Offer
- 6% of shares originating from dilutive instruments (BSA and BSPCE)
- 100% of subscribed shares through offset of receivables related to the repayment of the convertible loan issued in April 2018 (accrued interest and non-conversion premium included).
Duration : 365 days, following the settlement/delivery date.
|May 24, 2018||Approval of the prospectus by the AMF (Visa)|
|May 25, 2018||Launch of the Open-Price Offer (OPO) and of the Global Offering|
|June 6, 2018||Closing of the OPO (5 pm for counter subscriptions and 8 pm for online subscriptions)|
|June 7, 2018||Closing of the Global Offering (midday, Paris time)
Fixing of the Offer price and potential exercise of the extension option
|June 11, 2018||Settlement/delivery of the OPO and of the Global Offering|
|June 12, 2018||Start of trading of company shares on Euronext Growth
Beginning of the possible stabilization period
|July 6, 2018||Deadline for the exercise of the over-allotment option
End of the possible stabilization period