Chipmaker Arm aims for $52b valuation in NY listing

NEW YORK — British chip maker Arm, owned by Japan's SoftBank, will target a valuation of up to $52 billion when it lists on the New York Stock Exchange later this month, the company said Tuesday.

The company is looking to raise between $4.5 and $5.2 billion in its initial public offering (IPO), it announced in a filing, which would make it one of the largest tech IPOs in recent years.

Arm is a world leader in designing chips that are used in smartphones across the world and aims to be a major player in artificial intelligence.

Arm's IPO comes on the heels of a surge in the share price of chipmakers like Nvidia amid a boom in interest in companies building the hardware needed for AI to flourish in the wake of the successful launch of the chatbot ChatGPT. 

Arm's IPO is being closely watched by the financial markets, with large tech IPOs something of a rarity in recent months, as rising interest rates have pushed traders to take less risky financial decisions.

In 2022, the number of IPOs worldwide fell by more than 60 per cent year-on-year, while the value of these deals dropped by 45 per cent. 

Under these conditions, Arm's deal would be one of the largest IPOs in the tech sector since Alibaba's Wall Street IPO in 2014, which raised $25 billion at the time. 

The valuation target announced by Arm on Tuesday is much lower than SoftBank's earlier estimate of more than $60 billion.

However, it is still considerably more than the approximately $32 billion Softbank paid for Arm back in 2016.

The document filed with the US Securities and Exchange Commission said more than 95 million shares would initially be offered on the Nasdaq exchange at a price of between $47 and $51 per share.

The number of shares listed could rise up to 102.5 million in case of strong demand. 

All of the shares being sold are existing shares owned by Softbank, and all of the money from the IPO would go to the Japanese company.

Softbank will continue to own around 90 per cent of the company after the listing.

Tech giants including Nvidia, Apple, Samsung Electronics and Intel are interested in investing in Arm once the company is listed, according to numerous press reports. 

Arm will remain headquartered in the British city of Cambridge, and may consider a second listing on the London Stock Exchange, where it was previously listed before its takeover by Softbank in 2016.

Founded in 1990, the British company has some 6,000 employees in Europe, Asia and the United States. 

Its sales for 2022 were stable at $2.7 billion. 

Its processors "provided cutting-edge computing for over 99 per cent of the world's smartphones" the company said in 2022, estimating that "around 70 per cent of the world's population uses products" based on its technology. 

Arm's parent company SoftBank has experienced numerous difficulties in recent years. Its most high-profile failure came with the dramatic collapse of the American shared office giant WeWork.

Once valued at $47 billion, WeWork saw its valuation plummet amid investor concerns over its corporate governance under its controversial Chief Executive Adam Neumann.