Chip startup Mobix Labs Inc. (Nasdaq: MOBX) has yet to find much traction for its stock since going public late last year, but the semiconductor company has found one well-known investor on Wall Street as a significant backer.
B. Riley Principal Capital II, a division of the LA-based financial service company B. Riley Financial (Nasdaq: RLY), last month inked an agreement with Mobix that could see it ultimately buy as much as $100 million of Mobix’s common stock.
“We intend to leverage the capital primarily to execute on our strategic mergers and acquisitions plan,” President and Chief Financial Officer Keyvan Samini told the Business Journal on April 8.
The equity facility is also “anticipated to provide an additional funding source that will help accelerate Mobix Labs’ growth trajectory and enhance shareholder value within a shorter time frame,” according to Samini.
Mobix, founded in 2020, describes itself as delivering “disruptive next-generation wireless and connected solutions” for a broad range of applications in markets including 5G infrastructure, automotive, consumer electronics, e-mobility, healthcare, infrastructure and defense.
$20 Million
The per share price that B. Riley will pay for Mobix’s stock will be determined based on market prices.
In the short term, Mobix looks likely to raise about $20 million or more from the partnership, which could see B. Riley either keep its holdings in the chipmaker, or sell its shares to other investors.
A registration statement filed earlier this month calls for Mobix to sell as much as 9.5 million shares of common stock to B. Riley. Mobix’s shares currently trade around $2.12 each for a market cap of $55 million.
“As it relates to B. Riley, any stock sold to them will be at fair market value, so it is impossible to determine what percent [of the company] B. Riley would own,” said CFO Samini.
The fabless semiconductor company is backed in large part by OC tech entrepreneur James “Jimmy P” Peterson, who serves as executive chairman for Mobix.
The former head of Aliso Viejo-based chipmaker Microsemi Corp. counted a 15.4% stake in Mobix’s Class A shares and had a 39.8% voting stake in the company as of March, regulatory filings indicate.
Mobix’s board of directors counts other ties to the local chipmaking industry, including Skyworks Solutions Inc. and Syntiant Corp., both based in Irvine.
SPAC Way
Mobix went public in December via a reverse merger with a SPAC, Chavant Capital Acquisition Corp., whose shares traded around $10 prior to the deal with the Irvine firm being completed.
Mobix Labs closed at $5.22 per share on Dec. 22, its first day of trading.
The semiconductor company raised some $20 million when it went public, well below prior expectations. The company had predicted a pro-forma equity value of $295 million.
Chavant had raised some $80 million in its IPO, with that cash initially earmarked for Mobix’s balance sheet upon completion of the reverse merger.
The structure of SPACs allows shareholders the option to redeem their stock for full value, plus interest, at the time a business combination is completed. Given the rocky market for SPACs the past year, most of Chavant’s initial shareholders opted to do so, leaving little of those expected proceeds for Mobix.
The deal with B. Riley is expected to backfill that gap in funding.
Market Price
Samini said the agreement “operates in many ways like a put option, but at the market price rather than a pre-determined price.”
“This provides Mobix Labs the flexibility to issue shares at optimal times and prices. Such autonomy allows the company to determine the amount and timing of sales based on its strategic needs, while being able to set a minimum price to safeguard its valuation,” the Mobix CFO said.
Samini said that “at any given time the company is considering multiple opportunities” for acquisitions but did not name any specific companies. A pair of prior Mobix buys were for Orange County-based firms, Cosemi Technologies and EMI Solutions.
