ARC soars to 109% premium in frenzied stock dealing debut

ARC International, a microprocessor designer and component solutions provider, yesterday shrugged off the volatile market for technology shares with a 109 per cent jump on its Stock Éxchange debut.

ARC International, a microprocessor designer and component solutions provider, yesterday shrugged off the volatile market for technology shares with a 109 per cent jump on its Stock Éxchange debut.

ARC sold 29 per cent of its stock, or 75 million shares, at 210p. But frenzied buying, resulting in volume of 73 million shares, saw the stock rocket to a session high of 457.5p before closing at 428p. That valued the company, which has yet to make profit, at £1.14bn.

Retail investors were shut out of buying stock ahead of the float and have missed out on the easy gains on offer for institutional investors who were able to buy shares in this private placement. Apax and Nomura hold a combined stake of around 20 per cent cent, while seven other institutions own about one-third of the company.

Bob Terwilliger, chief executive, said: "We are encouraged by the very heavy level of subscription in our initial public offering which will enable the company to fund its rapid pace of development." ARC has been compared to ARM, the micro-chip designer, whose market value has soared nearly twenty-fold since its 1998 float. Dataquest estimates the market for application specific processor to be worth £24bn by 2003.

ARC designs and develops customisable microprocessor cores. It has developed a bespoke application processor which can be customised for installation in increasingly sophisticated telecoms voice and data networking products, and consumer electronic goods.

ARC issued 54 million new shares, while a further 21 million shares were sold by existing shareholders. Global coordinator Goldman Sachs holds an over-allotment option of an additional 11.25 million shares.

Employees own around 20 per cent of the company and Mr Terwilliger has a 5 per cent stake worth £55m.

ARC has acquired three companies to beef up its resources in software tools, ethernet controllers and real time operating systems. ARC aims to offer a configurable chip that is faster and cheaper for manufacturers to use that proprietary chips.

"All this technology has been integrated with our processes and it allows us to provide one stop shopping for network and telecom customers," Mr Terwilliger said.