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Tuesday, May 21, 2024

Irvine’s Mobix Labs Pushes Ahead on Public Listing

Seeks funding alongside SPAC

Irvine is getting closer to gaining another publicly traded semiconductor company, this one guided by local tech exec James “Jimmy P” Peterson, who previously ran Aliso Viejo chipmaker Microsemi.

Mobix Labs Inc., founded in 2020 with a focus on next-generation 5G wireless communications, this month detailed its recent operations and financial position in regulatory filings, in preparation to go public on the Nasdaq as early as this summer.

Mobix and Chavant Capital Acquisition Corp. (Nasdaq: CLAY), commonly referred to as a SPAC (special purpose acquisition company), first announced in November their plans to complete a reverse merger.

Completion of the deal is now expected in the third quarter, according to regulatory filings.

The SPAC path is sometimes considered a more expedient way to public trading than a traditional initial public offering, though the stock performance of companies using the SPAC vehicle post-merger has been spotty of late.

Mobix expects to have an implied equity value in the $250 million to $260 million range once it goes public; regulatory filings indicate the company’s estimated equity valuation has ranged from a high of $350 million to a low of around $220 million since negotiations with Chavant began in April 2022.

Mobix Labs President and CFO Keyvan Samini says the company expects to disclose the listed company’s stock ticker symbol by the end of the month.

Acquisition Push

As Mobix transitions into a publicly traded company, it anticipates an increased capacity for growth by acquiring cash-generating entities and assets, a similar strategy seen during Executive Chairman Peterson’s tenure at Microsemi, which was acquired five years ago for over $10 billion.

“Mobix Labs is a corporation with a primary focus on wireless technology, specifically 5G. However, our expertise extends beyond this singular domain,” Samini said.

The company calls itself a “fabless semiconductor company focused on the 5G millimeter wave wireless market.”

Fabless generally means the company designs and sells the chips but does not manufacture them, instead outsourcing the fabrication to a manufacturing plant or foundry.

“Our strategic approach involves fostering growth both organically and through targeted acquisitions. To date, we have successfully announced three such acquisitions,” Samini said.

Regulatory filings indicate that Mobix has earmarked close to $30 million, primarily in stock, for its initial slate of purchases, factoring in the $10 per share price typically associated with SPAC vehicles.

Two buys it has announced were for Irvine-based firms: EMI Solutions, an electromagnetic filtering products maker, and high-tech cable specialist Cosemi Technologies.

Samini said the company’s acquisitions will typically either be immediately profitable, or contribute to earnings within three quarters.

Cosemi’s revenue was responsible for most of Mobix’s 2022 revenue of $3.3 million, SEC filings indicate.

Samini said “the EMI transaction is definitely going to happen now” following a just-completed audit. The EMI deal had not closed as of the S-4 statement filed with the SEC on April 7.

Mobix said in the SEC filings this month that it had settled a dispute over legal challenges in the Cosemi acquisition in 2021.

“All the legal stuff with Cosemi is over,” Samini said. “We’re all set and everything is humming along with Cosemi pretty well.”

Funding Plans

Mobix counted an accumulated deficit of $53 million as of the end of 2022, but expects to be well capitalized once it goes public. Officials indicate the company could end up having well over $200 million available for its operations and additional acquisitions post-merger with Chavant.

In addition to the nearly $80 million that the Chavant SPAC raised in its 2021 initial public offering, and will be added to the balance sheet of Mobix upon completion of the reverse merger, Mobix plans to raise an additional $30 million via a private placement.

Company officials note that the $30 million Private Investment in Public Equity deal, also known as a PIPE, is expected to be tied to its common stock.

“In this market, a common stock PIPE is uncommon, positioning us as a unique entity in a market where many companies transitioning to public trading rely primarily on debt financing,” Samini told the Business Journal.

Samini also notes that the company has lined up a $100 million common equity line of credit, and that Mobix continues to pursue additional funding commitments for the PIPE.

The Mobix current headcount stands at 43 and will grow to about 65 with the addition of EMI, Samini said. The company has sales offices in Illinois, Taiwan, Japan, Texas and South Korea.

Mobix will stay based in Irvine and will continue to be led by Samini, Peterson and CEO Fabian Battaglia.

Chip Center

Mobix Labs Inc. will be the latest in a long line of publicly listed semiconductor companies in Orange County.

Broadcom Inc. (Nasdaq: AVGO), which got its start in Irvine before settling in San Jose, leads the pack with an estimated 1,300 employees in OC.

Local champion Skyworks Solutions Inc. (Nasdaq: SWKS), based in Irvine, had 524 employees as of earlier this year.

Aliso Viejo-based newcomer Indie Semiconductor Inc. (Nasdaq: INDI), which provides chips to make your car easier to drive and safer, and is one of the few area companies to see its shares rise after completing a SPAC deal in recent years, counted about 100 local workers as of early 2023.

Apple Inc. (Nasdaq: AAPL) has also been setting up a chip development hub in Irvine.
Overall, the OC chip industry employment rose almost 1% as of January from a year ago to 4,182, according to 2023 Business Journal data.

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