Asat plans to raise up to $250 million in Nasdaq IPO

Semiconductor packaging company Asat plans to go ahead with a $250 million Nasdaq IPO. Shares of 50% shareholder QPL have fallen over the past few weeks on speculation the listing had been postponed.

Asat, the world's third-biggest independent semiconductor packaging and testing company, plans to raise up to $250 million in an initial share offering on Nasdaq. The funds will be used to expand its facilities in response to a booming semiconductor market, says lead manager Salomon Smith Barney.

Hong Kong-based Asat will begin an extended roadshow 19 June to promote the offering. The team will start off in Hong Kong before moving to Singapore, the US and Europe. The offering is being underwritten by Salomon Smith Barney, Donaldson Lufkin & Jenrette and Chase H&Q. The company plans to set a price range tomorrow in a filing with the US Securities and Exchange Commission. It expects to price the listing on 10 July.

Asat has been in business for about 10 years. Its revenue in the year ended 30 April 1999 was $220 million, while net profit was $26 million. The company expects revenue to have risen to more than $300 million by the end of this financial year. It declined to reveal a net profit figure.

"We plan to expand our activities both on the assembly and the testing side," says Terry Scandrett, Asat's chief financial officer.

DRAM boom

The company is benefiting from a boom in the global semiconductor market, which is expected to grow 31% to $190 billion in 2000, according to the US-based Semiconductor Industry Association. Demand for dynamic random access memory (DRAM) chips is rising as increased internet use boosts demand for personal computers.

Samsung Electronics, the world's biggest DRAM chip maker, expects the market for PCs to grow 20% this year. It forecasts the market for DRAMs will rise 28% to $25.3 billion, from $19.7 billion in 1999. By 2002 it believes that figure will rise to $37.2 billion.

Asat provides packaging, assembly and testing services to semiconductor manufacturers. The company takes chips which come from the manufacturers' wafer fabrication factory, cuts them up into individual chips, encapsulates them in plastic and provides a medium through which the signals from the chips can be passed through to the printed circuitboard.

Asat is 50% owned by Hong Kong-listed QPL International Holdings, which announced in March that it planned to spin off Asat on Nasdaq. QPL sold a 50% stake in Asat last July to a group of investors led by Chase Manahttan for $196 million.

Shares of QPL, an investment holding company whose subsidiaries make integrated circuit leadframes and provide assembly of integrated circuits, have slumped 35% to HK$12.15 from a 52-week high of $18.70 in March. The decline came amid speculation that it would postpone the Asat listing due to poor market sentiment.

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