A fast-growing British semiconductor manufacturer is in line for a £200m funding injection. from blue-chip backers including asset management giant M&G.
Sky News has learned that Pragmatic Semiconductor, which makes low-cost microchips for use in products such as packaging and clothing, is close to completing a significant fundraising drive backed by Saudi money.
City sources said at the weekend that the M&G’s Catalyst fund, which invests in technology-led companies, would provide a significant portion of the new funding.
Prosperity7 Ventures, which is linked to Saudi oil giant Aramco, backed Pragmatic’s latest share sale late last year, with a source saying either it or Aramco itself had agreed to participate in the new round.
UK Infrastructure Bank and Northern Gritstone, the university’s spinout vehicle, are said to be among the new investors in the company.
An insider said the deal, which is expected to value Pragmatic at £300m. on a pre-money basis, will be announced in November.
The fundraising will represent a major vote of confidence in a company that is rapidly scaling to become a major player in the UK semiconductor sector.
Pragmatic operates from a 15 acre site in Durham and has a growing presence in Cambridge, where it is headquartered.
It is also aiming to expand its manufacturing capacity in the US, although earlier this year it rejected suggestions it was planning a move away from its UK base.
Chips produced by Pragmatic are produced without silicon and create integrated circuits that are thinner than a human hair.
The company was founded in 2010 by Scott White, a serial tech entrepreneur who handed over the CEO role to industry veteran David Moore earlier this year.
The explosion in connected devices globally has sparked a surge in demand for advanced chips, acting as a catalyst for the rapid growth of companies such as Nvidia, which has become one of the world’s few companies to reach a $1 billion valuation ( £823 billion).
Existing investors in Pragmatic include Arm, the chip designer that recently made its public market debut in New York, and British Patient Capital, a subsidiary of British Business Bank.
Pragmatic announced its $125m (£103m) Series C fundraising last December and said its growth highlighted the “strategic importance of [our] breakthrough semiconductor technology platform at a time when governments around the world are focused on ensuring secure control of supply chains for critical electronic components”.
Rishi Sunak, the Prime Minister, announced in May a 20-year plan to secure the medium-term future of the UK semiconductor industry.
The National Semiconductor Strategy, which involves up to £1bn public money, is seen by ministers as a critical component of the UK’s future national security agenda.
“Semiconductors underpin the devices we use every day and will be critical to advancing the technologies of the future,” said Mr. Sunak.
“Our new strategy focuses our efforts on where our strengths lie, in areas such as research and design, so that we can build our competitive advantage on the global stage.”
Pragmatic, M&G and Northern Gritstone declined to comment, while Saudi Aramco did not respond to a request for comment.
Lazard, the investment bank advising Pragmatic on fundraising, also declined to comment.