By
Tolu Ajiboye
February 9th, 2024
Arm is scheduled to go public in September, with the listing of its shares on the Nasdaq exchange. Arm’s market capitalization by that time is expected to be $60 billion to $70 billion, which would make the deal the world’s biggest initial public offering so far this year.
Tokyo-based conglomerate SoftBank Group Corporation (TYO: 9984) is reportedly planning to buy a 25% stake in Arm, a semiconductor and software design company based in Cambridge, from Vision Fund 1 (VF1). Currently, SoftBank which owns 75% of Arm stake, is negotiating with Vision Fund 1 on the terms of the deal. If signed, the deal will benefit VF1 investors who have been struggling to get profit for years.
SoftBank made an agreed offer for Arm company back in 2016, the offer was subject to approval by Arm’s shareholders. At that time, the CPUs producer was valued at $32 billion. The transaction was completed in September 2016. In 2017, a 25% stake in Arm was transferred to the SoftBank Vision Fund, which received investment from Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company.
VF1 investors have been bearing losses until recently, and Vision Fund 2 did not generate revenue as well, which led to SoftBank failing to secure outside investors. Over the last two fiscal years, SoftBank’s Vision Fund lost about $48 billion. Only in the second quarter of this year, Vision Fund posted a revenue following the buzz around artificial intelligence (AI) and living up expectations of those who trusted SoftBank’s bets on AI startups. As we have reported, after five consecutive losing quarters, the Vision Fund gained 159.8 billion yen, about $1.1 billion, in the quarter that ended on June 30.
Since May 2022, SoftBank has been in ‘defense mode’, which means it has been using an approach to protect against the competition amid economic uncertainty. Now, the company is shifting to ‘offense mode’, capitalizing on the AI revolution. Besides, it is planning to conduct an initial public offering (IPO) for Arm. Preparation started in March.
Upcoming Arm IPO
Arm is scheduled to go public in September, with the listing of its shares on the Nasdaq exchange. Arm’s market capitalization by that time is expected to be $60 billion to $70 billion, which would make the deal the world’s biggest initial public offering so far this year.
Later this month, SoftBank will officially apply to the US Securities and Exchange Commission (SEC) for the listing. Next, it will obtain approval from Nasdaq. Among those who will invest in Arm are giants like Apple Inc (NYSE: AAPL), Samsung Electronics, Nvidia Corporation (NYSE: NVDA), Intel Corporation (NASDAQ: INTC), and more.
Initially, Arm was eyeing the UK market for an IPO, which would be a great boost for the UK tech sector and secure London as an appealing destination for high-value IPOs. However, the lack of progress in the UK’s regulatory and market reform agenda made SoftBank change the target market. The US listing will come as a disappointment to UK ministers who had continually been lobbying the company to list on the London Stock Exchange.