Arm Holdings, a chip designer owned by SoftBank Group, has successfully raised $4.87 billion in the largest initial public offering (IPO) of the year. The IPO could potentially boost equity markets, which have been struggling recently. Arm sold 95.5 million American depositary shares for $51 each, pricing its offering at the top end of the range. This values the company at approximately $54.5 billion. SoftBank, after the IPO, will still retain about 90% of Arm’s shares. Arm had initially aimed to raise $8 billion to $10 billion but lowered its target due to SoftBank’s decision to buy a 25% stake and hold onto a larger portion of the shares. The IPO is expected to commence trading on Thursday on the Nasdaq Global Select Market under the symbol ARM.
The success of Arm’s IPO is not only a significant financial accomplishment for the company but also a potential catalyst for other tech start-ups and companies planning to go public in the US. Arm’s IPO is the largest of the year, surpassing the $4.37 billion listing by Johnson & Johnson consumer health spinoff Kenvue Inc. It could help unlock the IPO plans of other companies that have been stuck due to the challenging listing environment resulting from the pandemic.
SoftBank acquired Arm seven years ago for $32 billion and has played a crucial role in its growth and business model transformation. Arm designs semiconductors that are used in most smartphones worldwide, making it a key player in the chip supply chain. The company had originally aimed for a valuation between $60 billion and $70 billion in the IPO. SoftBank’s Vision Fund transaction valued Arm at over $64 billion. A successful debut by Arm would be beneficial for SoftBank’s founder, Masayoshi Son, especially after the Vision Fund’s significant losses last year.
The target valuation of Arm reflects the belief that it will benefit from the increasing demand for artificial intelligence chips and generative AI. This industry shift has contributed to Nvidia’s market value surpassing $1.1 trillion. Arm is expected to benefit from this trend and continue its growth trajectory.
In conclusion, Arm Holdings’ successful IPO, raising $4.87 billion, is set to provide a boost to global equity markets. The IPO could potentially unlock other tech start-ups’ plans to go public in the US. SoftBank’s investment in Arm has proven beneficial, and the company is well-positioned to capitalize on the growing demand for artificial intelligence chips. As Arm begins trading on the Nasdaq Global Select Market, its performance will be closely watched by investors and technology enthusiasts alike.
Arm Holdings, IPO, SoftBank Group, equity markets, chip designer, initial public offering, valuation, Nasdaq Global Select Market, semiconductor, artificial intelligence, generative AI, technology start-ups, pandemic, financial markets, global economy