Arm IPO Draws Backing From Global Tech Giants
Arm, a British chip design giant, filed for an initial public offering (IPO) last month. The company plans to list…
Arm, a British chip design giant, filed for an initial public offering (IPO) last month. The company plans to list its shares in the US instead of its home base of the UK. It intends to list on the Nasdaq stock exchange under the symbol “ARM.”
Several global tech giants have signaled interest in becoming cornerstone investors in the IPO, according to Arm’s amended F-1 filing; they’re interested in buying a total of $735mn in shares. These cornerstone investors are primarily Arm partners and customers, including
- Tech giants Apple and Google.
- Chipmaking software firm Cadence Design Systems.
- Chipmakers Samsung, TSMC, AMD, MediaTek, Intel, and Nvidia.
Arm creates chip designs and licenses them to external chipmakers. The company gets royalties each time a client manufactures a chip based on its design.
According to Arm’s amended filing, it plans to sell 95.5 million American depositary shares for between $47 and $51. Arm would raise about $4.5bn at the lower end of that range and $4.9bn at the top.
That range implies a target valuation of $50bn to $55bn, compared to the $31bn that SoftBank, a Japanese tech giant, paid to acquire Arm in 2016.
- A $735mn share purchase represents about 15% of the amount Arm plans to raise from its IPO. Arm didn’t close the number of shares the cornerstone investors agreed to buy. The investors’ interest is not legally binding, so they could end up buying lower amounts.
- Given this year’s global IPO market slump, it’s unclear if Arm would raise its targeted amount from the public listing. Raising $4.9bn would make Arm’s IPO the biggest in the US this year and the third-largest in Nasdaq history, behind Facebook’s 2012 and Rivian’s 2021 listing.
After the IPO, SoftBank will own roughly 90% of Arm shares and retain control.
Arm reported a $524mn net profit on $2.7bn in revenue in its last fiscal year ended March 31, 2023. Revenue and profits stayed almost flat from the previous year but rose 30% from two years ago.