Benzinga | Dec 9, 2020 09:08AM EST

AXT Reports Completion Of First Tranche Of $22.5M Private Equity Investment In China

AXT, Inc. (NASDAQ:AXTI), a leading manufacturer of compound semiconductor substrates, today announced that the first tranche of the private equity investment in its wafer manufacturing company in China, Beijing Tongmei Xtal Technology Co., Ltd. ("Tongmei"), has been fully funded. The first tranche investment totals approximately $22.5 million. Three funds within the Haitong Private Equity Group make up the first tranche investors: Liaoning Haitong New Energy Low-Carbon Industry Equity Investment Fund Co., Ltd., Liaoning Haitong New Kinetic Energy Equity Investment Fund Partnership (Limited Partnership) and Haitong Innovation Securities Investment Co., Ltd.

AXT previously announced on November 16, 2020 a strategic plan to access China's capital markets and progress to an initial public offering by Tongmei on the Shanghai Stock Exchange's Sci-Tech innovAtion boaRd (the "STAR Market"). To qualify for a STAR Market listing, Tongmei is required to have multiple independent shareholders. The first major step in this process is engaging reputable private equity firms in China to invest funds in Tongmei. In exchange for approximately a 7.14 percent minority interest in Tongmei, private equity firms will invest approximately $50 million. The second tranche of approximately $26.5 million is expected to fund in January 2021. The second tranche investment documents have not yet been executed.

"We are pleased to have completed the first tranche funding so quickly," said Morris Young, CEO. "This is an exciting time for our company as the applications and customer opportunities for which we have been preparing over the last two years are now taking shape. The materials we produce are proving to be an essential part of many of the technologies that will define advancements in telecommunications, networking, healthcare, consumer products, and other verticals for many years to come. We believe that our success to date in positioning ourselves for an IPO of Tongmei on the STAR Market reflects the strong market demand for our products and our future growth, as well as our well-established presence in China. We appreciate The Haitong Group's enthusiasm for our business and its cooperation throughout this process. We look forward to continuing to build a long and positive relationship."

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei does not expect to accomplish this goal until mid-2022. Today, AXT has posted on its website a brief summary of the plan and the process. The listing of Tongmei on China's STAR Market will not change the status of AXT, Inc. as a U.S. public company. AXT is a U.S. company, headquartered in Fremont, California. It will continue to be listed on the Nasdaq Global Select Market under the symbol AXTI.