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Thursday, August 06, 2009

Avago's Successful IPO is Second Largest of 2009

Avago Technologies Limited had a very successful IPO today. KKR & Co. LP and Silver Lake Partners took Avago private as a spin-off from Agilent (Agilent Charts) that was spun-off from Hewlett-Packard (Hewlett Packard Charts). KKR and Silver Lake Partners had the IPO today to use the recent strength in the stock markets to raise cash to return to investors and to reduce debt.

click chart courtesy of for full size image

Avago, which is based in Singapore, sold 43.2 million shares at the $15.0 IPO price. Avago raised $648 million making this the second largest IPO in the United States so far in 2009 according to Reuters.

Google Finance says:
Avago Technologies Limited is a designer, developer and global supplier of a range of analog semiconductor devices with a focus on III-V-based products. The Company’s product portfolio includes approximately 7,000 products in four primary target markets: industrial and automotive electronics, wired infrastructure, wireless communications, and consumer and computing peripherals. Applications for its products in these target markets include cellular phones, consumer appliances, data networking and telecommunications equipment, enterprise storage and servers, factory automation, displays, optical mice and printers. Avago Technologies Limited’s locations include two design centers in the United States, four in Asia and three in Europe. The Company has developed a portfolio of intellectual property that includes more than 5,000 United States and foreign patents and patent applications.

Between 1978 and 1998 I worked in the group that became Avago when it was part of Hewlett Packard. Their chairman of the board, Dick Chang, is someone I have good experience with but I did not buy AVGO shares as I worry their private owners were not able to invest enough in the business to match the growth I expect from some of their competitors that I have in "Kirk Lindstrom's Explore Portfolio." That is they may do very well, but my money is on some others doing better going forward. This could change as there are some very good people at Avago.

I also think the private equity partners would have kept this private longer if they thought it was as under valued.

I will keep my eye on Avago and perhaps look for a buying opportunity after the lock-up period expires.

Charts for:

As of August 6, 2009, "Kirk's Newsletter Explore Portfolio" is up 15.4% YTD vs. DJIA up 5.1% YTD.

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