SoftBank’s arm was valued at $54.5 billion in the biggest IPO of the year

NEW YORK, Sept 13 (Reuters) – Chip designer Arm Holdings Plc ( ARM.O ) raised a $54.5 billion valuation in its U.S. initial public offering (IPO) on Wednesday, seven years after taking over its owner SoftBank Group Corp ( 9984.T ). The company is $32 billion.

The IPO represents an up-and-down from the $64 billion valuation that SoftBank last month bought from the $100 billion Vision Fund it manages for a 25% stake in the company it didn’t already own.

Yet even at this low valuation, SoftBank is better off than its $40 billion deal to sell the weapon to Nvidia Corp ( NVDA.O ), which it abandoned last year amid opposition from antitrust regulators.

Arm priced its IPO at $51 a share, above its indicated range, raising $4.87 billion for SoftBank based on the sale of 95.5 million shares, the company said Wednesday. Arm’s decision on pricing was first reported by Reuters.

Arm shares are set to open for trading in New York on Thursday.

Arm has already signed up as capital investors in its IPO, including Apple ( AAPL.O ), Nvidia, Alphabet ( GOOGL.O ), Advanced Micro Devices ( AMD.O ), Intel ( INTC.O ) and others. Samsung Electronics (005930.KS).

A smartphone with the Arm Ltd logo is placed on a computer motherboard in this illustration taken on March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo Get license rights

Reuters first reported on Tuesday that Arm had received enough support from investors for its initial public offering (IPO) to hit the high end of a price range of $47 to $51 per share. commodity.

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Arm launched its IPO marketing efforts last week in an effort to convince investors beyond the mobile phone market, which it dominates with a 99% share.

Weak mobile demand during the global recession has caused the arm’s revenue to stagnate. Total sales in the 12 months to the end of March were $2.68 billion, up from $2.7 billion in the previous period.

At a meeting with potential investors in New York last Thursday, the cloud computing market has only a 10% share, so there’s plenty of room for expansion, which is expected to grow at an annual rate of 17% through 2025. Artificial intelligence. The automotive market, which accounts for 41% of it, is projected to expand by 16%, compared to an expected 6% growth in the mobile market.

Arm also told investors that royalty payments, which make up the bulk of its revenue, have been piling up since it began collecting them in the early 1990s. Royalty revenue came in at $1.68 billion in the latest fiscal year, up from $1.56 billion a year earlier.

As geopolitical tensions with the U.S. have led to a race to secure chip supplies, an area of ​​scrutiny for investors is arming China. China sales contributed 24.5% of Arm’s revenue of $2.68 billion in fiscal 2023.

Reporting by Echo Wang and Anirban Sen in New York Editing by Sandra Maler, Greg Roumiliotis and Richard Chang

Our Standards: Thomson Reuters Trust Principles.

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Echo Wang, Reuters correspondent, covers the intersection of U.S. equity capital markets and Chinese business in the U.S., covering news from the U.S. crackdown on TikTok and Grindr to the restrictions Chinese companies face in listing in New York. He is the 2020 Reuters Journalist of the Year. Contact: +9172873971

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Anirban Sen is the editor-in-chief of US M&A at Reuters in New York, where he leads coverage of mega-deals. After starting Reuters in Bangalore in 2009, Anirban left in 2013 to work as a tech deals reporter at several of India’s leading business news outlets, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 to lead the finance, reporting team, covering everything from investment banking to venture capital. Anirban holds a degree in History from Jadavpur University and a Post Graduate Diploma in Journalism from the Indian Institute of Journalism & New Media. Contact:+1 (646) 705 9409

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