Credo Technology CEO Bill Brennan happy with downsized $200M IPO – Silicon Valley Business Journal – Silicon Valley Business Journal

The markets may have plunged since the start of the year, but Bill Brennan never considered postponing his company’s Wall Street debut.
He and others at Credo Technology Group Holding Ltd. were monitoring the markets, but they had set in motion the company’s plan to go public about a year earlier and were determined to go through with it, Brennan, Credo’s CEO, told the Business Journal Thursday.
“We were all systems go,” he said. He continued: “The market backdrop was a bit of a distraction, but our investors really leaned in during our road show.”
The decision to go forward may have been a costly one. When his San Jose-based company went public Wednesday, it sold 20 million shares — 20% fewer than it expected — and priced them at the low end of its forecasted $10 to $12 a share range. Instead of raising as much as $300 million in its initial public offering, it raised $200 million — not including sales of shares to underwriters.
Despite that, Brennan was happy with the offering, saying Credo got what it needed out of the process to grow its business.
“We stayed flexible, and I think we ended up at a good spot, considering all things,” he said.
The company got a little bit of consolation Thursday when its stock debuted on the Nasdaq. Its shares (Nasdaq:CRDO) rose 16.5%, giving the company a market capitalization of about $1.6 billion at the end of the session.
Credo offers chips, cables and software that are used in high-speed data centers and 5G wireless networking infrastructure.
A potential Wall Street debut looked promising last year when a global shortage of semiconductors sparked investor interest in chip stocks and boosted the Philadelphia Semiconductor Index by more than 40% for the year. But the sector and that index have fallen sharply this month amid a broader sell-off in stocks amid concerns about inflation and a possible Russian invasion of Ukraine.
A year ago, as Brennan and his team were mulling options for taking Credo public, they considering doing so via a merger with a special purpose acquisition company. Even though there was a lot of buzz around SPACs at the time, they quickly rejected that idea, he said.
“We figured that a traditional IPO fit our personalities better than going public via a SPAC,” Brennan said. “SPACs were very hot — actually too hot — last January when we started this process. We just didn’t think that was a good fit for us.”
After founding Credo in China in 2008, Marvell Semiconductor executives Job Lam, Lawrence Cheng and Runsheng He boostrapped the company for its first seven years. Although they didn’t close their first venture round until 2015, they ended up raising about $206 million before the company’s IPO. Among Credo’s initial venture backers was Lip-Bu Tan, then the CEO of Cadence Design Systems Inc. and now that company’s chairman.
Going into Credo’s IPO, Lam, Cheng, He and Tan owned about 46% of its shares.
Although now based in San Jose, Credo retains its ties to China. About two-thirds of its 450 total employees are based in Asia, principally in China and Taiwan. The other third are located in the Bay Area.
“We are truly a global company,” Brennan said. “With such a large presence in Asia, this was actually the perfect timing for our IPO, just before the important Lunar New Year celebrations next week.”
In recent years, there’s been growing tension between the US and China, with both sides restricting their companies’ ability to do business in or raise funds from the other. But as Credo was preparing for its IPO, it didn’t field any concerns from investors about its China ties, Brennan said.
And that presence in China is not something he’s particularly worried about. Such ties are not that unusual in the technology industry, which long ago embraced globalization with supply chains and customer bases that span the globe, Brennan said.
“We try to concern ourselves with the work at hand and delivering to our customers worldwide,” he said.
The company’s large presence in China actually proved beneficial to Credo at the start of the Covid-19 pandemic, Brennan said. Because the outbreak hit China first, Credo was prepared to contend with it as soon as it reached the US, he said.
“We actually had some of our people working with equipment in their garages, like the early days of some companies in Silicon Valley,” Brennan said.
Now that it’s gone public, Credo plans to have a modest celebration before quickly getting back to business, he said.
“We’ll have a proper celebration in person when it’s appropriate,” he said. “Tonight we will have a virtual global celebration, then we will get back to work with the new capital we have raised.”
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