UK-based chip designer Arm Ltd., owned by Japan's SoftBank (TYO:9984) Group Corp, is set to go public in one of the most awaited initial public offerings (IPO) in recent years. The IPO, expected to hit the US stock market later this month, could value the company at as much as $52.3 billion.
In a filing with the Securities and Exchange Commission on Tuesday, SoftBank revealed its aim to raise up to $4.9 billion from Arm's Nasdaq debut. This figure could increase to $5.2 billion if the banks underwriting the IPO exercise an option to purchase additional shares.
Several prominent players in the tech industry, including Apple Inc (NASDAQ:NASDAQ:AAPL), Google LLC (NASDAQ:NASDAQ:GOOGL), Nvidia (NASDAQ:NVDA) Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:NASDAQ:AMD), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Samsung Electronics (KS:005930) Co., Ltd., and Intel Corporation (NASDAQ:NASDAQ:INTC) have shown interest in becoming cornerstone investors. Collectively, they could buy shares worth up to $735 million in the IPO.
Arm designs chips for 99% of the world's smartphones and licenses them to CPU makers such as Apple and Samsung. The company was publicly traded until 2016 when SoftBank acquired it for $32 billion.
In 2020, SoftBank attempted to sell Arm to Nvidia for $40 billion, which would have been the largest chip deal ever. However, global antitrust regulators did not approve of the transaction, leading to its cancellation in February 2022.
Despite this setback, if Arm's IPO values it at $52 billion, it would be a decrease from the approximately $64 billion valuation implied by SoftBank’s acquisition of the remaining 25% stake in Arm from its Vision Fund unit for around $16.1 billion last month.
This anticipated IPO has been closely watched as it promises to be the biggest US IPO since 2021 and potentially the world's largest in about a year since Porsche (ETR:P911_p) raised about $8.7 billion in Frankfurt last September.
For the fiscal year ending March, Arm reported nearly $2.7 billion in revenue according to its prospectus. Following the listing, SoftBank is expected to retain approximately 90% ownership of Arm’s shares.
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