Quiver Quantitative - SoftBank Group subsidiary, Arm Holdings is gearing up to raise up to $4.87 billion through its much-anticipated initial public offering (IPO), a figure lower than its initial target. The company plans to offer 95.5 million American depositary shares priced between $47 and $51 each, according to its recent filing with the US Securities and Exchange Commission. This IPO, which could value Arm at a maximum of $54.5 billion, comes after SoftBank's decision to retain a larger share portion by purchasing the 25% stake from its Vision Fund. Post-IPO, SoftBank intends to hold about 90% of the company's shares. This significant step in the tech industry could pave the way for other companies, such as Instacart and Birkenstock, to advance their own IPO plans.
Previously aspiring for a valuation between $60 and $70 billion during the IPO, Arm now finds its potential value slightly decreased yet still substantial, with SoftBank's transaction marking it above $64 billion. The chip designer company, which has crafted a niche in designing semiconductors present in most smartphones worldwide, is keen on pricing its shares by September 13, with trading commencing the subsequent day. A robust network of cornerstone investors including Apple (NASDAQ:AAPL) Nvidia (NVDA), and Google (NASDAQ:GOOGL) are lined up, with commitments reaching up to $735 million for the shares.
At the helm of the IPO are leading financial institutions such as Barclays (LON:BARC) (BCS) and Goldman Sachs (NYSE:GS) orchestrating the event alongside 24 other underwriters. Prior to hitting the Nasdaq Global Select Market, the company plans to rebrand itself to "Arm Holdings Plc" and will trade under the symbol "ARM". SoftBank's founder, Masayoshi Son, eyes a prosperous outcome from this move, following a significant loss last year, betting on the burgeoning artificial intelligence and generative AI sector that has notably propelled Nvidia to a staggering valuation of $1.2 trillion.
As the global chip industry navigates through a sales downturn exacerbated by inventory excess, Arm remains steadfast in its evolution. Under CEO Rene Haas, the company is looking beyond smartphones to delve deeper into advanced computing domains like AI applications and data center chips, areas promising lucrative returns. Despite a 1% dip in the fiscal revenue to $2.68 billion, the firm is optimistic about the role its processors will play in advancing AI and machine learning technologies. Returning to the public market since its acquisition by SoftBank in 2016, Arm is all set to mark one of the most significant IPOs in the tech industry, following the footsteps of tech giants Alibaba (NYSE:BABA) and Met (META)
This article was originally published on Quiver Quantitative