SoftBank’s Arm to Go Public in 2023’s Biggest US IPO


SoftBank Group Corp.’s semiconductor unit Arm Holdings Ltd. has filed for what is expected to be the biggest US initial public offering of the year, according to a regulatory document released on Monday. The UK-based company, which designs chips for smartphones, tablets, laptops, and other devices, plans to list its shares on the Nasdaq Global Select Market under the symbol ARM.

Arm’s Growth and Finances

Arm is a global leader in the semiconductor industry, with its chip designs powering more than 95% of the world’s smartphones and 85% of its tablets. The company also has a strong presence in the emerging markets of artificial intelligence, cloud computing, and internet of things, where its low-power and high-performance chips are in high demand.

SoftBank’s Arm to Go Public in 2023’s Biggest US IPO
SoftBank’s Arm to Go Public in 2023’s Biggest US IPO

Arm’s revenue grew by 13% to $2.1 billion in the fiscal year ended March 31, 2023, while its operating profit increased by 29% to $513 million. The company attributed its growth to the strong demand for its chip designs across various segments, especially in mobile and automotive markets. Arm also said it had signed 54 new licenses in the fiscal year, bringing its total number of licensees to more than 500.

Arm’s filing also revealed some key details about its finances, such as:

  • The company had $1.4 billion in cash and equivalents as of March 31, 2023.
  • The company had $3.6 billion in total debt as of March 31, 2023.
  • The company paid $203 million in dividends to its parent company SoftBank in the fiscal year.
  • The company had a net income of $184 million in the fiscal year, compared to a net loss of $1.1 billion in the previous year.

SoftBank’s Stake and Vision Fund’s Exit

SoftBank acquired Arm in 2016 for $32 billion, marking one of its biggest bets on the future of technology. However, the Japanese conglomerate has been under pressure to sell some of its assets to reduce its debt and fund its buyback program. In September 2020, SoftBank announced that it would sell Arm to US chipmaker Nvidia Corp. for $40 billion, but the deal faced regulatory hurdles and was eventually called off in July 2023.

SoftBank then decided to take Arm public instead, and bought out the stake that its Vision Fund had in the chip designer. The Vision Fund, which is SoftBank’s technology investment arm, had invested $8 billion in Arm in 2017, valuing it at $40 billion. However, after the Nvidia deal fell through, SoftBank agreed to buy back the Vision Fund’s stake for $12 billion, valuing Arm at more than $64 billion.

According to the filing, SoftBank will own about 75% of Arm’s shares after the IPO, while the Vision Fund will have no stake. SoftBank has also agreed not to sell any of its shares for six months after the IPO. The filing did not disclose how much Arm plans to raise in the IPO or what valuation it is seeking.

IPO Timeline and Underwriters

Arm plans to start its roadshow in the first week of September and price the IPO in the following week, Bloomberg reported. The company is expected to seek a valuation of $60 billion to $70 billion in the IPO, making it one of the largest tech listings ever. The IPO could also be the biggest US offering of 2023, surpassing Rivian Automotive Inc.’s $13.7 billion debut in October 2021.

The IPO is being led by Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Mizuho Financial Group Inc., according to the filing. The document also listed 24 other underwriters below that top tier, including Bank of America Corp., Citigroup Inc., Morgan Stanley, and UBS Group AG.

Arm has also held talks with some of its biggest customers about backing the IPO, such as Apple Inc., Samsung Electronics Co., Qualcomm Inc., and Nvidia. These companies could buy shares in Arm as strategic investors or as part of a consortium, according to Bloomberg. However, no formal agreements have been reached yet.

Market Reaction and Outlook

The news of Arm’s IPO filing boosted the shares of SoftBank on Tuesday, as investors welcomed the move to unlock value from one of its most prized assets. SoftBank’s shares rose by 2.56% to close at 22.80 USD on Nasdaq. The company’s market capitalization increased by $2.8 billion to $111.6 billion.

The IPO could also have a positive impact on the semiconductor industry, which has been facing a global chip shortage amid surging demand and supply chain disruptions. Arm’s chip designs are widely used by many chipmakers and device manufacturers, and its public listing could provide more transparency and innovation in the sector. Arm’s IPO could also attract more attention and investment to the UK’s tech scene, which has been overshadowed by the US and China in recent years.


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