By Echo Wang and Anirban Sen
NEW YORK (Reuters) – Chip designer Arm Holdings Plc. It was valued at $54.5 billion in a US initial public offering (IPO) on Wednesday, seven years after owner SoftBank Group Corp took the company private for $32 billion.
The IPO represents a downgrade from the $64 billion valuation of the $100 billion Vision Fund SoftBank manages last month, when it took a 25% stake in the company it didn’t own.
But even at this low valuation, SoftBank Arm is worth better than the $40 billion it sold to Nvidia Corp., which was rejected by antitrust regulators last year.
Arm priced its IPO at $51 a share, at the top of its target range, raising $4.87 billion for SoftBank based on 95.5 million shares outstanding, the company reported Wednesday. Reuters first reported Arm’s decision on the price.
Arm shares are set to begin trading in New York on Thursday.
Arm has enlisted several of its major clients as cornerstone investors, including Apple, NVIDIA, Alphabet, Advanced Micro Devices, Intel, and Samsung Electronics.
Reuters first reported on Tuesday that Arm had enough support from investors to maintain a price range of at least $47 to $51 per share, including the possibility of a higher price. Range.
Arm launched its IPO marketing efforts last week to convince investors to move beyond the mobile market, which it has a 99 percent share of.
Weak mobile demand during the global economic slowdown led to a decline in Arm’s revenue. Total sales totaled $2.68 billion in the 12 months to the end of March, compared with $2.7 billion in the year-earlier period.
Arm told investors in New York on Thursday that the cloud computing market, which has only a 10% share and plenty of room for expansion, is expected to grow by 17% annually through 2025. Artificial intelligence. The automotive market, which accounts for 41 percent, is forecast to expand by 16 percent, compared to an expected 6 percent growth for the mobile market.
Arm told investors that his royalties, which have made up most of his revenue since he began collecting them in the early 1990s, are accumulating. Royalty revenue came in at $1.68 billion last fiscal year, up from $1.56 billion a year ago.
Another area for investors to scrutinize is ARM’s exposure to China as geopolitical tensions with the United States intensify the competition for chip supplies. Sales in China contributed 24.5% of Arm’s $2.68 billion revenue in fiscal 2023.
(Reporting by Echo Wang and Anirban Sen in New York; Editing by Sandra Mahler, Greg Roumeliotis and Richard Chang)