(Bloomberg) -- Canyon Bridge Capital Partners has hired Lazard Inc. to seek a buyer for chip designer Imagination Technologies, according to people familiar with its plans.
The private equity firm with ties to Chinese state investors believes it can get more than the £550 million ($681 million) it paid for Imagination in 2017, according to the people. The Canyon Bridge fund that owns the chipmaker is nearing the end of its fixed term.
Lazard is currently reaching out to potential purchasers and the company has already received inquiries, said the people, who asked not to be identified because the process hasn’t been made public.
A spokesperson for Lazard declined to comment. A representative for Canyon Bridge didn’t respond to a request for comment. Imagination’s chief executive officer, Simon Beresford-Wylie, also declined to comment on the plans for his company when reached by phone.
Texas Instruments Inc., MediaTek Inc. and Japan’s Renesas Electronics Corp. are customers that use Imagination’s technology in their chips, primarily for in-vehicle electronics, according to product listings. Alphabet Inc.’s Google is also a customer, according to reports. The owners of the UK-based company believe its intellectual property and chip design team have become more valuable with the rapid growth of artificial intelligence computing, the people said.
Graphics chip technology is at the heart of so-called accelerators that speed the process of training and running AI software. Nvidia Corp. has become one of the world’s most valuable companies by capitalizing on the flood of demand for such hardware.
While Imagination has focused on lower-performance mobile versions of the technology that don’t directly rival Nvidia, many companies are working on bringing AI to battery-powered devices such as smartphones.
Imagination, based in Hertfordshire, England, has about 3,500 patents connected to the technology, many of which are recent filings. It also has a 650-engineer chip-design team.
Beresford-Wylie, denying a Daily Telegraph report that he’s stepping down, said he has no concrete plans to retire. He rejected assertions in some reports that the company has engaged in illicit transfers of technology to China.
The company has licensed some customers in China to use its graphics processor units, or GPUs, he said. Those GPUs were for use in graphics cards for PCs — older products, he said. When the US government decided that some of those customers posed a security risk and placed them on the so-called Entity List, meaning permission was required from Washington to provide them with technology, Imagination immediately stopped supporting them, he said.
Canyon Bridge, backed by China Reform Fund Management, acquired Imagination in 2017 and took it private following the company’s split with Apple Inc. The iPhone maker previously relied on Imagination for the graphics element of chips used in its signature product.
Imagination was an early casualty of Apple’s shift to designing its own components, though the two signed a multi-year licensing deal. Imagination warned investors in April 2017 that Apple would be shifting away from it in as little as two years.
The company’s owners are betting Nvidia’s runaway success – its revenue is on course to double for a second straight year and top $100 billion – will create strong interest in acquiring Imagination’s capabilities.
Imagination lists graphics chips for areas such as automotive, robotics, phones and computers among its products and touts the ability of those chips to be used as AI accelerators.
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