RUSNANO's investment in NeoPhotonics for Russian market expansion
RUSNANO, a Moscow-based investment firm, has invested $39.8 million in optical module and subsystem vendor NeoPhotonics Corp. (NYSE: NPTN). NeoPhotonics says the investment, made via the acquisition of 4.97 million newly issued common shares of NeoPhotonics in a private placement, will be used to fund global expansion – including in Russia and other Commonwealth of Independent States (CIS) countries.
As a result of the investment, RUSNANO Managing Director Sergey Polikarpov has received a seat on NeoPhotonics’ board of directors.
RUSNANO was founded in March 2011 as an open joint stock company through reorganization of the state corporation Russian Corporation of Nanotechnologies and controls $10 billion in funds. The Government of the Russian Federation owns all of RUSNANO’s shares.
The $8.00 per share RUSNANO paid for the placement represents a significant premium over the $4.49 trading price of NeoPhotonics’ stock last Friday, April 27. RUSNANO cannot resell the shares for two years, at which time NeoPhotonics must register the shares for potential resale.
“We are pleased to receive this strategic investment from RUSNANO,” said Tim Jenks, chairman, president, and CEO of NeoPhotonics. “We welcomed this investment as it aligns with our strategy to accelerate growth globally, with particular emphasis on fast growing and emerging markets, including in Russia and the CIS countries.
“Not only are these markets deploying high speed, agile and fiber-to-the-home networks but we are also seeing more of our customers target service providers and invest locally in Russia and more broadly in Eastern Europe,” continued Jenks. “We started to see and investigate this growth opportunity several years ago, and we added sales capability in the region and have since been engaged with and supplying several customers in Russia. With the planned support from RUSNANO, we believe that NeoPhotonics is well-positioned to capitalize on new and greater opportunities in the region.”
“One of the unique advantages of NeoPhotonics is its vertically-integrated design and manufacturing processes for photonic integrated circuit-based products,” said Polikarpov. “The company’s planned research and production facilities in Russia are intended to be able to perform a wide range of steps from PIC development to processing and fabrication. We believe that with our support in Russia, we can further enhance the company’s development cycles and shorten the time for broader adoption for NeoPhotonics products in Russia and the global market.”
NeoPhotonics plans to use some of the investment for general corporate purposes as well as to establish design and production capabilities in Russia. The expansion in Russia is targeted for completion by July 31, 2014, and is not expected to have a material impact on the company’s results in 2012.