SoftBank’s chip designer, Arm, is gearing up for a monumental initial public offering (IPO), with aspirations of achieving a valuation surpassing $52 billion. In a regulatory filing made public on Tuesday, the Japanese conglomerate outlined its plan to offer 95.5 million American depository shares of Arm at a price range of $47 to $51 each, with the goal of raising up to an impressive $4.87 billion if the top end of the range is met.
This IPO announcement follows SoftBank’s recent acquisition of the remaining 25% stake in Arm from its Vision Fund unit, which valued the chip designer at a staggering $64 billion. Upon the completion of the offering, SoftBank will maintain a majority ownership stake of 90.6% in Arm’s ordinary shares.
Notably, some of the tech industry’s most prominent players, including Apple, Nvidia, Alphabet, Advanced Micro Devices (AMD), Intel, and Samsung Electronics, have been identified as potential investors in Arm. The British company’s cutting-edge designs power over 99% of the world’s smartphones, underlining its significance in the technology landscape.
Arm’s impending return to the public markets is not only a pivotal moment for SoftBank but is also expected to have a positive impact on the overall IPO market, potentially encouraging other startups to move forward with their own offerings.
Reuters had initially reported on SoftBank’s proposed IPO price range over the weekend, and sources have hinted that the range might be raised if investor demand remains strong leading up to the IPO pricing.
Crucially, Arm has successfully secured a lineup of major clients as investors for its IPO, strengthening its prospects. Leading the underwriting efforts for the offering are prestigious financial institutions, including Barclays, Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group. Notably, Arm has opted not to designate a traditional “lead left” bank, instead choosing to evenly distribute underwriter fees among these top four banks. The company anticipates trading on the Nasdaq Global Select Market under the symbol “ARM.”
Although Arm faces a reduction in valuation compared to its Vision Fund deal just last month, this IPO’s success signals a resurgence in investor appetite for high-growth technology companies. This appetite is particularly notable as Arm’s sales for the year ending March 31st dipped to $2.68 billion, partly due to a decline in global smartphone shipments.
With its upcoming IPO, Arm is poised to potentially emerge as a new powerhouse in the technology industry, marking a significant development in the ever-evolving landscape of chip design and innovation. Investors and industry observers alike will be closely monitoring the IPO process, anticipating its impact on both Arm and the broader tech sector.