Ketki Saxena
Investing.com -- Chip designer Arm Holdings, backed by SoftBank Group, has disclosed plans for an initial public offering (IPO) that is set to be the largest of the year. The announcement came on Tuesday, signaling a potential revitalization of a lackluster IPO market that has been dampened by market volatility. This development could give startups, such as Instacart, Klaviyo, and Birkenstock, renewed confidence to proceed with their own public listings.
Despite a one per cent dip in annual revenue due to a slowdown in global smartphone sales, Arm Holdings has shown resilience. The company is now shifting its focus towards burgeoning segments such as cloud computing.
On Monday, it was reported that Arm's IPO was expected to be filed publicly as early as that day. The listing is planned for September and could be one of the biggest tech listings ever on a US exchange. Arm has lined up an underwriting team of 28 banks that include some of Wall Street’s biggest: Barclays (LON:BARC) Plc, Goldman Sachs Group Inc (NYSE:GS)., JPMorgan Chase & Co (NYSE:JPM)., and Mizuho Financial Group Inc. are in top roles, while Bank of America Corp (NYSE:BAC). and Citigroup Inc (NYSE:C). have more minor positions.
According to reports, SoftBank, the majority owner of Arm Holdings, plans to sell around 10 per cent of the company's shares in the IPO, aiming for a valuation between USD 60 billion and USD 70 billion. This projection marks a shift from the initial plan of raising USD 8 billion to USD 10 billion, due to SoftBank's recent acquisition of the remaining 25 per cent stake in Arm that it did not directly own.
Notably absent from the roster is Morgan Stanley (NYSE:MS), which often serves as a lead adviser on landmark technology IPOs but was not included in Arm Ltd.’s draft filing for its initial public offering. Last year, SoftBank had asked banks involved in its IPO to underwrite a margin loan of about $8 billion. Many of these banks took part in that financing, but Morgan Stanley did not participate.
As the company prepares for its market debut, Arm Holdings is expected to list on the NASDAQ:TICKER exchange under the ticker symbol 'ARM'. Unlike the traditional approach of designating a "lead left" bank, Arm Holdings has chosen to evenly distribute underwriter fees among the top four banks.