Astera Labs and its investors raised US$713 million (S$957 million) in the semiconductor connectivity company’s initial public offering (IPO), pricing the shares above a marketed range that had already been elevated.

Tapping demand for investments related to artificial intelligence, Astera and the current stockholders sold 19.8 million shares on March 19 for US$36 each, according to a statement confirming an earlier report by Bloomberg News. Astera, whose backers include Intel along with Sutter Hill Ventures, had marketed the shares for US$32 to US$34 after increasing both the size and price target for the share sale.

At the IPO price, Astera has a market value of about US$5.5 billion based on the outstanding shares listed in its filings with the US Securities and Exchange Commission. Including stock options and restricted share units, its fully diluted value is closer to US$6 billion.

The listing is one of the largest of the year so far, preceding by one day the high-profile share sale by social media company Reddit, which is seeking as much as US$748 million for it and its employees and shareholders.

Instacart, Klaviyo

Astera’s IPO tops the last big listings by US technology companies, Instacart’s US$660 million and Klaviyo’s US$659 million offering in September. While those IPOs, along with British chip designer Arm Holdings’s US$5.23 billion offering – 2023’s biggest – failed to launch a listings rush, the market has warmed up since then. More than US$7.2 billion was raised via IPOs on US exchanges in 2024 before Astera’s share sale, according to data compiled by Bloomberg.

The IPO is being led by Morgan Stanley and JPMorgan Chase, with participation from Barclays, Deutsche Bank, Evercore and Jefferies Financial Group, as well as six other firms acting as co-managers. Astera’s shares are expected to begin trading March 20 on the Nasdaq Global Select Market under the symbol ALAB.

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 and Research that raised US$150 million at a US$3.15 billion valuation. 

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

Losses cut

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.

The company’s investors include Intel’s venture arm. Its biggest shareholder is Sutter Hill Ventures, which will control 12.6 per cent of the company’s stock after the listing. Funds affiliated with Fidelity will have a 6.4 per cent stake, the filings show.

Astera co-founder and chief executive officer Jitendra Mohan will own 6.1 per cent of the company’s shares, while co-founder and chief operating officer Sanjay Gajendra will have a 5 per cent stake.

About three million of the shares in the IPO are being sold by current shareholders. The group Upward Bound Youth is selling two million of those shares, with the rest being sold by C&F Investments and investors with stakes of less than 1 per cent each. BLOOMBERG