Re: rPI Goes Public

On 14/06/2024 09:34, Richard Kettlewell wrote:

Pancho <Pancho.Jones@proton.me> writes:

On 13/06/2024 17:39, Richard Kettlewell wrote:

Pancho <Pancho.Jones@proton.me> writes:

Mighty white of them, while they pocket half a billion quid.

I think you’ve confused the implied valuation of the whole business
with
the amount raised, which was £166M according to
https://edition.cnn.com/2024/06/11/tech/raspberry-pi-ipo-london-stock-exchange/index.html

>
I may have confused the implied valuation pre and post the funds
raised in the offering, but I didn't confuse the valuation with the
funds raised.
>
Are you saying the £540 market valuation includes the 166M raised from
the share offering?

 Nobody has “pocketed half a billion quid”. The business has only
received £166M.
 

You are missing the point. The people who owned Raspberry Pi Limited do not benefit directly from the money raised. They benefit from their share of the company becoming a fungible asset.
An IPO does at least two things, yes it raises capital for the company, but it also makes shares in the company tradable, fungible, convertible to money. It is the second part I was referring to.

The valuation quoted in the euronews article is total number of shares
multiplied by the price they were trading at at that point (which is now
even higher).
 

The critical thing is when the valuation is taken, pre or post the IPO. The number of shares increased by ~50% with the IPO. If 166M was raised by the share offering, the value of the company will increase instantaneously by 166M. However, the proportion of the company owned by each existing share, prior to IPO, will decrease by ~2/3.
The pre IPO valuation, which set the IPO share price, was quite low, ~332M. This is lower than the implied valuation when the company raised ~33M a few years ago.
I got the pre/post IPO bit wrong, I assumed IPO valuations didn't include the newly raised capital. However, by the time I actually posted the share price had risen, so half a billion was about what the shares held prior to IPO were worth.
Raspberry Pi Ltd was very profitable. I'm not sure why they needed a cash investment. One justification I saw was that they need to design the next chip themselves, rather than get it from Broadcom.