IQE has announced a placing at 140p to raise c.£95.1m. The new funds will enable it to scale the business to take advantage of the growth opportunities in 3D sensing and other mass market opportunities. The group has also confirmed that if the current VCSEL ramp continues on its current growth curve, there is potential to exceed current FY’17 expectations. Our published bull case scenario shows the potential for 81% upgrades to FY’18 EPS and we believe this placing is indicative of demand for IQE’s products well in excess of our current forecasts. The new tools bought with the funds from this placing are unlikely to deliver material revenue until FY’19, however, we expect previously announced capacity increases to enable significant upgrades in FY’18. With continued strong newsflow likely we believe the shares remain attractive and retain our positive view on the stock.