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Gorilla Technology IPO: Taiwan Edge AI company goes public

By  Yoke Wong

Edited by Vanessa Kintu

14:50, 6 January 2022

Businessman presses the ipo button Online network diagram initial public offering.
Gorilla Technology IPO: Taiwan Edge AI company goes public – Photo: Shutterstock

Gorilla Technology Group, a Taiwan-based Edge artificial intelligence (AI) developer, will be going public in the US by March this year, pending the completed merger with Global SPAC Partners Co.

On 22 December 2021, Gorilla announced that it would be merging with Global SPAC Partners, a blank check company. The combined company will be called Gorilla Technology Group Inc. The group is expected to be publicly listed on Nasdaq under the symbol “GRRR” following completion of the transaction.

“This step of Gorilla listing on Nasdaq is well timed as the company is now ready to expand outside of its Southeast Asian base,” said Tomoyuki Nii, Gorilla’s chairman.

Instead of going public through an initial price offering (IPO), which could take a year or more to complete, Gorilla plans an ‘IPO’ through a reverse merger. With a reverse merger, a private company such as Gorilla can become a public company by purchasing control of a public company such as a special purpose acquisition company (SPAC).

Global SPAC Partners (GLSPU) is a publicly traded company created for the purpose of merging with another company. The merger of Gorilla Technology Group and GLSPU will be conditioned upon the latter having at least $50m in gross cash proceeds in its trust account or other sources. It would also require the approval of Gorilla’s Nasdaq listing application in addition to other customary conditions.

Following the merger, GLSPU will become a wholly owned subsidiary of Gorilla Technology Group Inc. According to GLSPU’s Securities Exchange Commission (SEC) filing, its class A and B shares will be converted into ordinary shares of Gorilla on a one-for-one basis after the merger. Under the recapitalisation, each of the company’s ordinary shares will be valued at $10.00 a share based on a $650m valuation on a fully diluted basis.

ProForma valution

Source: Gorilla Technology Group, SEC

75% of the newly formed company will be owned by existing Gorilla shareholders, and 19%, or 16.47 million shares, will be offered for sale to public shareholders. The remaining 6% are held by GLSPU’s sponsors.

As part of the transaction, certain Gorilla shareholders have entered into a lock-up agreement, which would prevent the sales of shares from the period before the completion and ending on the six-month anniversary of the closing. However, this is subject to early release if the closing stock price of the company ordinary shares equals or exceeds $12.50 a share for any 20 out of 30 trading days after the closing of the transaction. 

The “transaction values Gorilla at a pro forma enterprise value of approximately $708m and provides up to $169m in gross proceeds from cash held in Global’s trust account (assuming no redemptions),” according to GLSPU’s’s release.

Ahead of the Gorilla’s listing date, let’s analyse the company’s business model, revenue, growth strategy and risk factors to help you navigate the market.

What is Gorilla Technology?

The Taiwan-based company claims to be the leading Edge Analytics AI solutions provider, with the business built on over 20 years of patented and proprietary technology.

Gorilla’s founder and CEO, Spincer Koh, will be a board member of the newly formed listed company.

Gorilla was established in 2001 and “specialises in video analytics, network security and big data to support a wide range of solutions for commercial, industrial, cities and government purposes.” Since then, the company has developed Edge AI technology, which carry out analysis closer to the sources of data and operate across most platforms, devices and businesses.

Gorilla’s technology has been used to monitor major intersections in roads in Kaohsiung City in southern Taiwan. According to Gorilla, its Edge AI solution was able to monitor and identify traffic violations using real-time video, which increased the number of violations identified from three a day to 305 a day at one intersection. Additionally, it was able to launch other traffic/city management related services on top of the traffic monitoring.

According to Gorilla, the company clients include Danone, ExxonMobil, AIS (Thailand’s largest mobile operator), ITOCHU Techno-Solutions Corporation (Japan’s leading system integrator), Portland International Airport (US), Taoyuan Airport (Taiwan) and Taipei Medical University Hospital.

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Aim of Edge computing?

The company’s investor presentation says there are four main benefits (cost, latency, security and reliability) for its edge computing and AI technology:

Cost: Moving AI processing to the edge is highly economical and cost-effective. Only processed, highly valuable data is sent to the cloud.
Latency: One of the greatest benefits of Edge AI is that data is processed and stored at a much faster speed. This is especially relevant for applications that require real-time processing.
Security: Edge computing makes it possible to guarantee that private data never leaves the local device. Edge computing distributes processing, storage and applications across a wide range of devices and data centers, which makes it difficult for any single disruption to take down the entire network.
Reliability: Can work without connectivity. With Internet of Things (IoT), Edge computing devices and edge data centres positioned closer to end-users, there is less chance of a network problem in a distant location affecting local customers.

Projected earnings

As a private company, Gorilla was not required to publish its financial results. However, the company’s management estimated that AI Solutions generated $50m revenue in 2021 and would grow to $65m in 2022, $90m in 2023, $151m in 2024, $254m in 2025 and $402m in 2026.

According to Gorilla, new AI products are expected to drive earnings from 2024 onwards.

Revenue breakdown

In 2022, The company plans to expand its sales to the US, targeting 6.5% of its sales there. It also intends to expand into the EU and Middle East in 2022, targeting 16% sales in these regions. Sales in Taiwan accounted for 65.9% of the company’s revenue in 2021, and it plans to reduce its reliance on the domestic market by growing in other regions.

The US is expected to become Gorilla’s biggest sales revenue generator by region in 2026, accounting for 26.2% of total sales. In contrast, its domestic Taiwanese revenue is expected to shrink to 12.3% in 2026.

 Geographical breakdown of sales

Growing market for IoT devices

“The industry is on the cusp of dramatic growth as the surge in number of connected devices (expected to reach 55.7 billion by 2025 according to International Data Corporation (IDC) and 5G network roll out by telecom players is expected to generate burgeoning growth in the volume of data being generated and increased adoption of AI,” said Gorilla.

The group believes that there will be “a significant increase in smart infrastructure investment in the near future, with much of the spending focused on relieving post-pandemic stresses and facilitating economic recovery.”

Citing IDC data, the company said: “the global edge computing market is expected to see massive growth in the coming years and is anticipated to reach $250bn by 2024, exhibiting a compound annual growth rate (CAGR) of 12.5% over the forecast period.”

In Gorilla’s investor report, it cited the Valuates Reports published in May 2021, which forecasts the global Edge AI software market size to grow at a CAGR of 24.8% between 2021 to 2026, reaching $3.4bn by 2026, up from $713.4m in 2019.

In addition, the global Edge AI hardware market is projected to grow at a CAGR of 20.46% from 2021 to 2028, reaching $3.1bn by 2028, up from $870.9m in 2020, said Gorilla, citing data from a verified market research in June 2021.

The company claimed that as one of the early movers in Edge computing, it will have early mover advantage.

When considering whether to invest in the company’s stock, you should always do your own research, considering the outlook and relevant market conditions. A number of factors dictate whether stock prices rise or fall, including the company’s fundamentals and broader macro-economic factors. There are no guarantees. Markets are volatile. You should conduct your own analysis, taking in such things as the environment in which it trades and your risk tolerance. And never invest money that you cannot afford to lose.

FAQs

Is Gorilla Technology a good investment?

The use of Edge AI solutions is forecast to grow with increased investment in smart infrastructure, which could support Gorilla Technology’s sales. However, forecasts can be wrong.

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