Chipmaker Acer Labs' over-the-counter listing yesterday appeared to be a hit with investors, but a low initial price meant that almost no one was willing to sell the shares.
"Before we listed, the gray market price was around NT$100," said Acer Labs Inc (ALi) Finance Director, Daniel Chien, "and our initial price was NT$68, so many, many people wanted to buy, but nobody wanted to sell."
As a result, the price hit its 7 percent daily maximum almost immediately, jumping to NT$72.5 when a single block of 1,000 shares was sold shortly after the market opened.
"It's pretty typical in Taiwan that there are two or three days during which people want to hold on to the stock," commented Daniel Heyler of Merrill Lynch Taiwan, "because it's an IPO, there's this honeymoon period."
Volume will begin to increase later in the week, Heyler believes. "Probably after four or five days we'll start to see more activity -- and when there's more activity the price is more reflective of the value of the stock."
ALi shareholders have allocated ten percent of the Acer Group member's 84 million fully paid shares for the IPO. In anticipation of high demand, around 2.2 million additional shares will be issued, probably at the end of this month, Mr. Chien said.
ALi makes a variety of different chips, including chipsets, key components that are part of the main circuit board of all personal computers.
"Now the chipset market is very hot," agreed ALi's Daniel Chien, "because of the shortage of the Intel BX chipset. I think the market is giving chipset makers a higher p/e ratio. So we want to issue some new shares to raise some money and improve our financial structure."
ALi will probably also use its new wealth to acquire know-how, commented Heyler. "The need to continue to acquire intellectual property ... is a must at this stage of the game -- integration is a must. Definitely there will more acquisitions as they move forward."
However, Heyler does not expect ALi to join some of their competitors in the CPU (Central Processing Unit) business, but believes the company will instead look at ways to integrate more functions into its chipsets.
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