(Bloomberg) — SoftBank Group Corp. to Arm Holdings Pvt.
Most read from Bloomberg
Whether Arm’s return to the public market will go smoothly and pave the way for other soon-to-be-public companies won’t be known until shares of the chip designer open for trading on Thursday. At the IPO price, ARM is valued at $54.5 billion, according to Bloomberg News calculations.
In Arm Moghe’s favor, the IPO was oversubscribed 10 times, Bloomberg News reported. This means investor interest exceeds supply in the proposed price range of $47 to $51 and will help push the stock higher once trading begins.
In setting the price for the IPO, Softbank founder, chairman and CEO Masayoshi Son indicated that he was unwilling to weaken interest even if it meant leaving money on the table.
At last Wednesday’s rate meeting, some bankers and executives focused on whether the higher price of $52 made sense, and people familiar with the matter asked not to be identified because the meeting was private. . Son joined the discussion and chose $51, saying it wasn’t worth risking a healthy debut for $100 million or more in revenue.
Long bet
Sony’s approach to the IPO reflects its continued long bet on Arm, the chip in most of the world’s smartphones. ARM is the beneficiary of an industry shift to artificial intelligence chips and generative AI – which has helped it have a market value of more than $1.1 trillion.
In the year Founded in 1990 as a joint venture between Acorn Computers, VLSI Technology, and then-Apple Computer Inc., ARM was listed on the London Stock Exchange and Nasdaq from 1998 until 2016, when SoftBank bought the business for $32 billion.
In the year In 2020, SoftBank unsuccessfully tried to sell Arm to Nvidia for $40 billion. That move angered Arm’s customers, who didn’t want to see the company that provides the foundational technology used by the cellphone industry fall into the hands of a single buyer.
IPO Pivot
With that deal off the table, Arm has previously turned to an IPO at a valuation of $60 billion to $70 billion, according to Bloomberg News.
Arm had previously planned to raise $8 billion to $10 billion in the listing, but that target has been reduced at least in part because SoftBank decided to buy the 25 percent stake held by Vision Fund in Arm in a transaction valued at more than $64 billion. Based on bug reports.
SoftBank also decided to hold a larger stake in Arm’s stock, 10% of which was only available to investors who included some of Arm’s biggest customers. As part of the IPO, Arm allocated more than $700 million to Intel Corp., Apple Inc., Nvidia Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co.
The underwriters have the option to purchase up to 7 million additional shares.
The IPO is the world’s largest this year, surpassing the $4.37 billion IPO listed by Johnson & Johnson’s consumer health arm, Kenvee Inc., and could be a boon for dozens of tech startups and other companies planning to go public in the U.S. In the year It is stuck in the longest list since the financial crisis of 2009.
Instacart, Clavio
Online grocery-delivery firm Instacart Inc., marketing and data automation provider Clavio, Vietnam-based Internet startup VNG Ltd. and shoemaker Birkenstock Holding Ltd. All have filed for public disclosure.
The arms listing is the largest in the US since electric vehicle maker Rivian Automotive Inc. filed a $13.7 billion offering in October 2021. The IPO is set to rank among the tech industry’s biggest ever, though it’s still below the two biggest: Alibaba Group Holding Ltd’s $25 billion 2014 offering and the $16 billion 2012 IPO by Meta Platform Inc., then Facebook Inc.
Explainer: All About Arm, Biggest IPO of 2023: QuickTake
ARM technology is used in all smartphones, but it is not well known among the users. ARM sells the blueprints needed to design microprocessors, and licenses a technology known as an instruction set that describes how software programs interact with chips. Arm’s technology has helped it spread across phones where power efficiency and battery life are critical.
Chip Slump
The frenzy around AI has fueled a rally in chip stocks this year, sending the Philadelphia Semiconductor Index up 41 percent. The overall chip industry is still struggling with declining sales, but it’s getting worse in terms of inventory.
The arm’s revenue fell 1 percent to $2.68 billion in the year ended March 31, according to the filings. The company’s net income fell to $524 million this year, up from $388 million to $549 million in fiscal 2022.
Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Mizuho Financial Group Inc. They are leading Arm’s supply. Raine Securities LLC, sponsored by SoftBank, is acting as financial advisor in connection with the IPO.
ARM shares are set to trade on the Nasdaq Global Select Market under the symbol ARM.
–With assistance from Gillian Tan and Amy Orr.
(Updates to add chip index in paragraph 17)
Most read from Bloomberg Business Week
©2023 Bloomberg LP
