A Not-So Public Affair

Jiangsu Xiehe Electronic started trading today on the Shanghai Stock Exchange. The company makes flex circuits and performs SMT. That should be a big deal, since PCB manufacturers going public has become a rarity.

This is not your father’s printed circuit industry. IPOs are a novelty in our industry these days.

Moreover, almost all the IPOs of fabricators or EMS companies in the past 10 years have been in Asia.

This year, Covid be damned, Sihui Fushi Electronic Technology went public in July on the Shenzhen Exchange, and TLB is scheduled to be listed this month in Korea.

Insofar as I know, that’s it.

Last year was no better. Cal-Comp raised some capital by listing a subsidiary in the Philippines. Ventec went public in Taiwan.

Stretching back over the past decade, there are a few nuggets. But just a few.

Shennan Circuits (2017 IPO) and Zowee Technologies (2010) are public on the Shenzhen Exchange, and OK Industries (2017) is traded in Japan. And Dixon Technologies debuted in 2017 on the India Exchange.

Over in the UK, fabricator Trackwise Designs had an IPO in the UK a couple years ago. And NCAB went public in Sweden.

As private equity firms continue to consolidate fabricators and (mostly) EMS companies, as New Water Capital did with Veris and Saline Lectronics this week, the question becomes, what is their end-game? Will they amass enough revenue through M&A to make a public offering viable? Or will they try to button it up and sell to another PE firm — or perhaps an even larger manufacturer?

And is the era of the publicly traded circuit board manufacturer winding down?

The Bourse Identity

Foxconn’s prospectus to issue a public offering to raise money for its nascent foray in to cloud computing is less revealing for what it proposes than where the offering will take place.

Rather than leverage its newfound admiration in the US (or at least, in a couple pf offices in Washington) by accessing the Nasdaq or NYSE, instead Foxconn is opting for a far less prominent bourse: the Shanghai Exchange.

The reasons are obvious: The Shanghai bourse lacks the capital controls and oversight of the world’s dominant financial exchanges. A company, even one as large as Foxconn, can get away with a lot more, since reporting requirements and level of scrutiny are so less rigorous than in New York or Munich or London. Foxconn’s financial picture is opaque: even reporting on its revenues and profits remains an uncertain undertaking. Staying offshore makes that possible.

Finally, Shanghai is a Chinese exchange and Foxconn is a Chinese company. (Yes, I know it’s based in Taiwan. But look where the bulk of its facilities, workers, investment and attention is. And keep in mind that for many Taiwanese, China is still the motherland.) This latest move underscores that fact.

Isola’s IPO

Isola is going public.

No big surprise there, except for 1) it is about six years later than I would have first thought and 2) November 2011 is not exactly the peak of the IPO craze.

Although I have known Ray Sharpe, Isola’s CEO, since his days at Alpha Metals (almost two decades ago), I haven’t yet spoken to him about the decision. That said, I would guess that Isola feels the next 12 months could be rocky. The company has blown the doors off so far in 2011, and perhaps they think they should strike while that iron is hot.

Moreover, if 2012 sinks, then they might need the cash from the IPO to help cover the downturn. I can’t see TPG wanting to put more of its own capital in.

Isola was the largest laminate maker to be privately held. This is a big story.