Arm is targeting a valuation of up to $52 billion in an IPO
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Arm plans to price its initial public offering at between $47 and $51 a share, according to an updated filing Tuesday, raising up to $4.9 billion for current owner SoftBank and valuing the UK-based chip designer at up to $52 billion.
The company said that the underlying investors, including Apple, Google, Nvidia, Samsung, Intel and TSMC, have indicated that they plan to buy up to $735 million in Arm shares at the IPO price.
SoftBank paid $32 billion to acquire Arm in 2016, but its latest target is short of the $64 billion valuation set less than a month ago in a deal with its Vision Fund, the $100 billion Saudi-backed investment vehicle run by the Japanese conglomerate. .
SoftBank will still own 90.6 percent of the company after the IPO, which is expected to complete next week. The two companies will begin their roadshow promoting the offering, which is expected to be one of the biggest offerings of the year, to investors in New York on Tuesday.
Among the 10 core investors, who were named for the first time on Tuesday, are chipmakers AMD and MediaTek, as well as Cadence and Synopsys, which provide tools for chip design.
Qualcomm, one of the world’s largest mobile chip makers and an important customer of Arm, is not listed among the strategic backers, as the two companies are locked in a lawsuit over intellectual property licensing issues.
Before the price range was published on Tuesday, some fund managers had expressed skepticism that SoftBank would be able to persuade investors to pay up to $50 billion for a company that reported flat revenue and declining profits in the run-up to the IPO.
James Anderson, one of Britain’s best-known technology investors, said Arm had “missed a lot of opportunities” since the SoftBank acquisition, such as faster growth in cloud computing. He said that could make it “more difficult than they thought” to achieve the required rating, despite Arm’s strength in the smartphone market.
“It’s not clear that Arm is a critical player in most areas of expansion,” Anderson added. “I don’t see it having a particular area of strength in AI-type developments.”
Barclays, Goldman Sachs, JPMorgan Chase and Mizuho lead a consortium of 28 IPOs. The Raine Group — a small investment bank with ties to SoftBank and whose co-founder Jeffrey Sine sits on Arm’s board — acts as lead advisor on the deal.