Intel Unit Mobileye Prices IPO Above Range to Raise $861 Million

INITIAL PUBLIC OFFERING (IPO) - NEW YORK. Mobileye Global Inc, the self-driving unit of chip maker Intel Corp, raised $861 million in an initial public offering (IPO) on Tuesday, braving the trading volatility that has thwarted many stock market hopefuls, according to a person familiar with the matter.

Mobileye priced 41 million shares at $21 per share, the source said, requesting anonymity ahead of an official announcement. The company had previously guided the IPO could be priced at between $18 and $20 per share.

The IPO values Mobileye at $16.7 billion, a far cry from the $50 billion valuation that Intel was initially hoping to achieve.

Mobileye is selling only a 5% stake in itself, less than the typical 10% to 20% stake for most IPOs. This limits the financial hit it will take as a result of its lower valuation.

Mobileye did not immediately respond to a request for comment.

U.S. IPOs are having one of their worst years on record, with traditional offerings on track to raise the least money in over two decades, according to Dealogic which tracks listing data going back to 1995. The Renaissance IPO index, which captures the largest and most liquid U.S IPOs, has slumped 51.4% this year, compared with the S&P 500 index's drop of 19.54%.

The Cboe Volatility Index, Wall Street's fear gauge, is hovering at about 29. VIX readings above 20 are generally associated with an elevated sense of investor anxiety about the near-term outlook for stocks.

FROZEN MARKETS

Hundreds of companies have postponed IPO plans this year due to volatility in capital markets. Earlier in October, grocery delivery startup Instacart scrapped its plans to go public this year.

Intel Chief Executive Officer Pat Gelsinger has defended Mobileye's decision to push ahead with an IPO, saying the listing was a way to "move (Mobileye) into the market".

Intel will retain a large stake, including all the Class B shares Mobileye plans to issue, according to a filing with the U.S. Securities and Exchange Commission. Each Class B share will have voting rights equivalent to 10 Class A shares.

Mobileye reported $854 million in revenue for the first six months of the fiscal year, up 21% from same period last year. The company posted a net loss of $67 million.

Mobileye first went public in 2014 at a roughly $5 billion valuation, before Intel acquired it for $15.3 billion in 2017.

Mobileye's shares are scheduled to start trading on Wednesday on the Nasdaq under the symbol "MBLY".

Goldman Sachs Group IncGS.N and Morgan StanleyMS.N are the lead underwriters for the offering.