SoftBank’s Arm launches IPO, pleasing T Rowe with a $52B valuation

Smartphones bearing the Arm Ltd logo

In this illustration taken on March 6, 2023, a smartphone displaying the Arm Ltd logo is placed on a computer motherboard.

Softbank Group's arm Holdings Ltd. launches roadshow for its blockbuster initial public offering (initial public offering) On Tuesday, chip designers tried to convince investors that it was worth as much as $52 billion It was the largest stock sale of the year.

arm Kicking off its roadshow in Baltimore, influential asset management firm T Rowe Price headquarters highlights the importance of fund managers in the overall picture initial public offerings.

time Rowe Price has been a major investor in some of the biggest stock market debuts, including shares in electric vehicle maker Rivian Automotive Inc, which valued the company at $66.5 billion In its initial public offering 2021. armof initial public offering It's the biggest since then.

arm Other potential investors were also met on Tuesday, including Arlington, Virginia-based Sands Capital, according to the sources, who requested anonymity to discuss private meetings.

SoftBank to issue 95.5 million Cambridge, UK-based American depositary shares arm Priced at $47 to $51 each, expected to raise $4.87 billion at the top of the range.

read: SoftBank-backed chip design company Arm reveals it is applying for a U.S. IPO

arm Revealing the proposed range would put its valuation at between $48 billion and $52 billion. The company also revealed that it may issue some shares as employee compensation. Valuationup to $54.5 on a fully diluted basis billion.

this Valuation That arm Chase represents pullback from $64 billion Valuation Last month, SoftBank paid $100 for the 25% stake it didn't already own in the company. billion Vision Fund.

But even so Valuation askSoftBank will do better than $40 billion trade sale arm Nvidia abandoned the company last year amid opposition from antitrust regulators.

read: SoftBank's Arm Ltd aims for valuation of up to $70 billion in September IPO – Bloomberg News

Jamie Mills O'Brien, portfolio manager at British fund manager Abrdn, said he found SoftBank's Valuation ask inside initial public offering “More palatable than initially discussed.”

“We are closely watching how the company handles its relationship with its China operations and the further impact of the technology 'war' between China and the United States,” he said.

The Japanese conglomerate will own 90.6% of the shares armThe company said it will sell its common shares after the offering closes, adding that it will not receive any proceeds from the offering. initial public offering.

arm Many major clients have signed up as cornerstone investors initial public offeringincluding Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel and Samsung Electronics.

arm said investors have expressed interest in buying a total of $735 million in shares sold in the offering.

return to public markets

arm Founded in 1990 as a joint venture between Acorn Computers, Apple Computer and VLSI Technology.

The company's shares traded on the London Stock Exchange and Nasdaq from 1998 to 2016, when it was taken private by SoftBank at a valuation of $32 billion.

armThe listing of is expected to boost initial public offering global markets and push other startups to go public, as its success would signal a return of investor interest in technology companies.

read: Companies preparing for IPOs are waiting on the sidelines

Several other well-known brands, including grocery delivery service Instacart Inc, marketing automation platform Klaviyo and footwear brand Birkenstock, are expected to list on U.S. exchanges in the coming weeks.

It would also be a milestone for SoftBank, as it has hired several well-known technology companies as investors to drum up support for the company, whose designs power more than 99% of the world's smartphones.

Reuters first reported SoftBank's Recommended price range initial public offering Saturday.Sources also said it could be initial public offering If investor demand is strong, prices will rise.

arm A significant portion of its revenue is generated through royalties, which are based on the average selling price of its customers' products armBased on wafer or fixed fee per wafer.

For the year ended March 31, armSales fell to $2.68 billionmainly affected by the decline in global smartphone shipments.

Unlike most loss-making but high-growth tech companies, these companies go public at hefty prices ValuationBut later it fell below the listed price, arm is profitable. Analysts said this is expected to significantly reduce investor anxiety.

It's still early days, said Sara Russo, a senior analyst at Bernstein. arm Benefiting from the artificial intelligence boom, but the field represents an area of ​​potential growth arm.

analysts said arm Nvidia has been the biggest beneficiary of the artificial intelligence boom, with its shares soaring more than 230% so far this year, as its chips must be combined with energy-efficient central processing units (CPUs) – armexpertise.

Barclays, Goldman Sachs, JPMorgan Chase and Mizuho Financial Group are the lead underwriters of the offering.

If the underwriters exercise their right to purchase shares arm Entirely as part of the Green Shoe Option it will take initial public offering Amount increased to $5.2 billion.

armusing a total of 28 banks initial public offeringdid not choose traditional “left-led” banks and would distribute underwriter fees evenly among the four major banks.

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arm Expected to trade on Nasdaq under the symbol “arm“.

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