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Canyon Bridge reveals aim to expand in UK
Release on :2017-10-18
The new owner of Imagination, Canyon Bridge, will look to grow both in UK and across Europe presence after buy-out, writes Josh Brooks.
Imagination Technologies’ new owner Canyon Bridge has given an upbeat outlook on the UK’s electronics sector, saying it is looking for more companies to buy in the UK and Europe and that it is “enormously excited” by the talent pool on this side of the Atlantic.
In an interview with Electronics Weekly, Ray Bingham, a partner and co-founder of the Silicon Valley-based private equity house, said that the company was planning to expand the team of engineers at Imagination and build a “hub of talent” around the business, which it agreed to buy for £550m last month.
He also said that Canyon Bridge, which is indirectly backed by funds from the Chinese government and aims to buy technology businesses and then expand their presence in Asian markets, is looking for further acquisitions both in the UK and across Europe.
While he declined to comment on specific acquisition targets, Bingham said the company was “confident in the UK’s position as a centre for technological innovation” and was “enormously excited by the talent and expertise in the UK”.
He also underlined Canyon Bridge’s disappointment at being blocked from buying Lattice Semiconductor last month by US authorities over national security concerns, saying the company was “bemused” by the decision. “Frankly we could have done nothing more to demonstrate why the acquisition posed absolutely no threat to US security interests,” he said.
‘Will Imagination stay in the UK? Absolutely’
Donald Trump blocked China-backed Canyon Bridge from buying Lattice last month – only for the firm to emerge just weeks later as the buyer of Imagination. Co-founder Ray Bingham discusses the company’s plans.
Canyon Bridge hit the headlines in September when US president Donald Trump blocked the Silicon Valley private equity business from buying Lattice Semiconductor in a planned $1.3bn deal.
The reason: US authorities believed that China-backed Canyon Bridge’s purchase of the business would pose a national threat to the US.
Under its ownership, they argued, Lattice’s intellectual property (IP) in defence technology could leak to China.
More broadly, the blocking of the deal underlined the concerns that the company, and others like it, would act as a vehicle to import IP into the burgeoning Chinese semiconductor industry which is seen by that country’s government as strategically important.
Canyon Bridge, perhaps predictably, disagrees with that analysis, saying instead that its investment approach is to “enable technology companies to reach their full growth potential [and] bridge the gap between [the] US, Europe and China”.
Moreover, the block on the Lattice deal hasn’t put the brakes on the company’s ambitions to develop a portfolio of technology companies.
Just weeks after that deal was blocked, Canyon Bridge was in the headlines again – this time as the buyer of Imagination Technologies.
The £550m acquisition for one of the stars of UK electronics puts an end to six months of turmoil at the IP business.
Back in April, it was announced that Apple, Imagination’s biggest customer – accounting for around half of sales – would stop using its GPUs within two years. (In fact, the new iPhone 8 and X both feature GPUs that are designed in-house by Apple engineers.)
Imagination’s share price fell 60% in a day and a restructure and break-up of the business began which culminated in the company putting itself up for sale entirely in June.
Under the deals announced last month, US-based CPU division MIPS has been bought by another Silicon Valley venture capital firm, Tallwood Capital, while the bulk of the business has gone to Canyon Bridge.
Electronics Weekly spoke to Canyon Bridge partner and co-founder Ray Bingham – himself a veteran of electronics businesses including Cypress Semiconductor, Flextronics and Oracle, among others (see below) – about Lattice, Imagination and Canyon Bridge’s future plans.
What are your plans for Imagination in its post-Apple, post-MIPS future?
The company is leading innovation around new devices across the internet of things (IoT), wearables and a number of other markets.
Canyon Bridge can provide access to Asian and Chinese markets where there is a huge appetite for such products and Imagination’s footprint is currently relatively small.
This transaction is in line with our strategy of providing equity and strategic capital to enable technology companies to reach their full growth potential by opening new markets through our collaborative investment approach.
What’s the attraction of Imagination to Canyon Bridge? Is the IP portfolio more or less important than the expertise in the company?
Imagination Technologies has a world‑class management team and highly talented employees.
With our backing and investment, the business can continue to invest in developing its technology, attract and hire the best engineers, and acquire and service customers globally.
We are investing in UK talent and expertise to accelerate the expansion of Imagination Technologies, particularly into Asia, where its technology platform will lead the continued globalization of British-developed innovation.
Imagination is known to have lost a number of its top engineers to companies including Apple. Do you have any specific plans to solve this problem?
The market for top technologists is always a fluid one. With the overhang of the sale process finally removed, we hope to be able to retain and attract the best talent in the market.
Top engineers will have an opportunity to be a vital part of an exciting technological growth story.
We want to tap into the UK’s rich talent pool, allowing another British technology company to remain globally relevant.
You’ve said you will invest in the business in the UK. At this stage, what does that mean?
The acquisition marks a new exciting chapter for Imagination, and we will be looking to retain and then increase the UK head-count as we invest in the business over the coming months and years.
We are really excited by opportunities across Europe, including in the UK. You only have to visit Cambridge to see the vibrant ecosystem that is developing in and around the city. It resembles the early days of the Silicon Valley.
Long-term, will Imagination stay in the UK?
Absolutely. Imagination has a world-class management team and a dedicated, highly experienced employee base. We were attracted to the business because of the talent, as well as the IP portfolio, and look forward to working with the team on the next exciting chapter for this innovative business.
We want to build a hub of talent around the business which will incentivise top engineers to join the business and to live and work in a positive environment.
What are your ambitions in the UK and European electronics market? Have you identified new acquisition targets?
This is the first transaction by Canyon Bridge in the UK and we hope that it will be followed by others, both in the UK and elsewhere. At this stage we can’t discuss any of those targets but we are enormously excited by the talent and expertise in the UK.
Do you see the UK as an attractive target for investment at the moment?
We remain very confident of the UK’s position as an investment destination and a centre for technological innovation and leadership. It remains a home for great technologists. The main attraction for us is the underlying growth potential of Imagination Technologies.
Following the block on Canyon Bridge buying Lattice, are you still pursuing investments in the US?
As a global private equity investment fund, we are focused on providing equity and strategic capital to enable technology companies to reach their full growth potential.
Inevitably some of these assets will be located in the US and UK, where some of the leading technology companies are based.
While it is unfortunate that the Trump administration saw grounds to block our acquisition of Lattice, we will still pursue other US opportunities if there is a strong investment and business case.
Were you surprised by that decision, and what is your reaction to the concern that Lattice technology could have leaked to China and that this posed a national security risk?
Yes, we and our legal advisers were bemused by president Trump’s decision to block the acquisition of Lattice.
Frankly we could have done nothing more to demonstrate why the acquisition posed absolutely no risk to US security interests.
Clearly we are disappointed with the decision but will stay focused on other investment opportunities.
Ray Bingham CV
Current position: co-founder and a partner of Canyon Bridge Capital Partners
Previous positions held: executive chairman of Cypress Semiconductor; chairman of Flextronics International; lead independent board director of Oracle Corporation; managing director with General Atlantic, a global private equity firm; president and CEO, Cadence Design Systems
Education: BSc in economics, Weber State University; MBA, Harvard Business School
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