Bristol-based artificial intelligence firm Graphcore Ltd has been bought by Tokyo-based investment firm SoftBank Group Corp in its latest move to cash in on the next-generation technology.
The head of the computer chipmaker hailed the deal as a ‘tremendous endorsement’ of its work.
The companies did not disclose the value of the acquisition. Graphcore was valued at $2.8 billion in 2020 after raising hundreds of millions of dollars from investors.
However, it has struggled financially and recorded a pre-tax loss of $205 million in 2022, and sales of just $2.7 million – the most recent year for publicly-available financial results.
The company said it had been hit by challenges in the wider economic environment which resulted in weaker demand for hardware sales, and led it to shut down its branches in Norway, Japan and South Korea, and trim the number of staff it employed in the UK and US.
Graphcore was founded in 2016 by Nigel Toon and Simon Knowles, and saw itself as taking on American tech titan Nvidia Corp with its AI chips.
Nvidia briefly overtook Microsoft Corp as Wall Street’s most valuable stock last month.
Toon, also Graphcore’s chief executive, said SoftBank’s acquisition was a ‘tremendous endorsement of our team and their ability to build truly transformative AI technologies at scale, as well as a great outcome for our company’.
‘There remains much to do to improve efficiency, resilience, and computational power to unlock the full potential of AI.
‘In SoftBank, we have a partner that can enable the Graphcore team to redefine the landscape for AI technology.’
The company designs and makes processers and software tools that support new developments in machine intelligence.
Schroder British Opportunities Trust PLC said the sale of its holding in Graphore to SoftBank will result in an uplift of 22% on the latest first quarter valuation, with an impact on the overal net asset value of Schroder British of around plus 68 basis points.
Chrysalis Investments Ltd expects to receive about $56.0 million from the sale of its holding in Graphore. ‘The investment adviser has been clear that this was one of the riskier positions in the portfolio: one that offered a play on the rise of the, at the time, nascent AI market, but where the downside protection of the company’s position in the capital structure offered a way of defraying that risk,’ Chrysalis said.
‘With the sale of Graphcore, the company will have met the cash reserve required to fulfil the first part of the capital allocation policy; any further realisations should trigger the second part of the CAP, namely the return of £100 million to shareholders,’ said Nick Williamson and Richard Watts, managing partners of the investment adviser.
Molten Ventures PLC said it realised a return of $26 million from its holding in SoftBank, which it had first invested in 2016.
SoftBank shares closed 4.4% lower at JP¥11,395.00 each on Friday in Tokyo.
Schroder British shares were flat at 79.95 pence each, Chrysalis shares rose 3.5% to 86.12p each, and Molten Venture shares were 0.4% lower at 388.00p each on Friday morning in London.
By Anna Wise, PA Business Reporter
Press Association: Finance
source: PA
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