- SoftBank Group's Arm is embarking on its initial public offering (IPO) with aspirations of achieving a valuation exceeding $52 billion, marking the most substantial U.S. stock market flotation of the year. In its regulatory filing, Arm revealed that SoftBank is offering 95.5 million American depository shares of the UK-based chip designer at a price range of $47 to $51 per share, with the intention of raising up to $4.87 billion at the top end of the range. This valuation represents a decline from the $64 billion SoftBank paid last month to acquire the remaining 25% stake in Arm from its Vision Fund.
- Despite the reduced valuation, interest in the IPO remains strong, fueled by the desire of Arm's clients to strengthen their commercial partnerships with the company and prevent competitors from gaining an advantage. After the IPO concludes, SoftBank will hold 90.6% of Arm's ordinary shares, with no proceeds directed to SoftBank from the offering. Major clients, including Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel, and Samsung Electronics, have committed to investing in Arm's IPO, with 'cornerstone investors' indicating an interest in purchasing a combined $735 million worth of the offered American depository shares.
Why it matters
Arm's listing, the largest in New York since Rivian in late 2021, is expected to invigorate the global IPO market and inspire other startups to pursue public offerings, signaling a resurgence of investor appetite for technology firms. This milestone is also significant for SoftBank, which has garnered support from prominent technology players as investors, underscoring Arm's role in powering over 99% of the world's smartphones. Reuters initially reported SoftBank's proposed price range for the IPO, and it remains a possibility that the range may be raised if investor demand proves strong.