Arm, the British computer chip designer, has reportedly lowered its targeted valuation ahead of its long-awaited IPO. The company is said to be seeking a valuation between $50 billion and $55 billion, down from the $64 billion valuation given by its owner, SoftBank, in a recent transaction. The news comes as Arm prepares to talk to potential investors in the coming days, with plans for an IPO of shares as early as next week.
Cambridge-based Arm, known for its chip designs used in mobile phones worldwide, has been privately owned by SoftBank since 2016. Many analysts believe that its current valuation is higher, especially with the growing demand around artificial intelligence.
As an important player in the global chip sector, Arm’s designs are relied upon by major computing companies like Apple and Samsung. Some of these clients are eager to have influence over the company and are reportedly interested in buying shares. Apple, Samsung, Nvidia, Advanced Micro Devices, Intel, Cadence, and Google’s parent company, Alphabet, have supposedly agreed to invest in Arm’s IPO. SoftBank, led by Japanese billionaire Masayoshi Son, has been looking to realize the value of its investment for years.
Previously, a $40 billion deal to sell Arm to Nvidia was scrapped due to regulatory concerns about potential harm to competition. Since then, SoftBank has been trying to convince investors that Arm is worth as much as $80 billion. Nonetheless, a lower valuation of $50 billion would still make the Arm IPO the biggest since electric pickup truck maker Rivian’s $70 billion float in November 2021.
Despite a quiet period for IPOs due to rising interest rates affecting valuations, Arm’s listing is expected to generate substantial fees for the 28 banks involved. The IPO will take place on the Nasdaq stock exchange in New York, where many tech giants are listed. UK Prime Minister Rishi Sunak attempted to persuade Arm to relist in London, but the effort was unsuccessful.
After the IPO, SoftBank could still own up to 90% of Arm, ensuring significant influence in a sector that holds geopolitical importance, as the US and China compete for control over cutting-edge chips. Arm, in its filing announcing the IPO, revealed that a quarter of its revenues come from China, which makes it vulnerable to policy changes.
In summary, Arm has reportedly adjusted its targeted valuation for its upcoming IPO. While SoftBank valued the company at $64 billion, Arm is now seeking a lower valuation of $50 billion to $55 billion. Despite the adjustment, Arm’s IPO is expected to be significant, attracting investment from major players in the industry.
