British technology company Arm Holdings announced that it will go public on September 14th, 2023, on the Nasdaq in the year’s biggest IPO event.
Once described as ‘the jewel in the crown of British technology’, Arm Holdings was bought by Japan’s internet firm Soft Bank in 2016 in a $32 billion deal. In 2022, Nvidia attempted to buy Arm for around $40 billion, but both companies called off the sale because of significant regulatory challenges.
Nvidia’s attempt to buy Arm took place amid the global chip shortages crisis and the production slowdown caused by the COVID-19 pandemic. As a result, SoftBank decided to float Arm’s shares in 2023, initially planning a dual listing on New York’s Nasdaq alongside the London Stock Exchange.
|Headquarters||Cambridge, United Kingdom|
|Number of employees||7,170|
|Revenue 2021||$2.7 billion|
|Launch Date||14 September 2023|
|Potential Valuation||$52 billion|
Arm Holdings specialises in chip architecture, meaning that they don’t simply manufacture microchips, they also design them. According to their website, about 70% of the world population uses Arm-based technology across all markets. This means that almost every internet user is exposed daily to a product built with Arm technology, including cars, smartphones, drones, and even electronic passports.
Moreover, the company has built a global ecosystem of innovators with more than 1,000 partners who have embedded more than 250 billion Arm-based chips in products. Arm has been a driving force in the semiconductor industry for more than 30 years and has offices in the UK, US, China, Japan, India, S. Korea, Taiwan, France, Germany, Sweden, and many other countries across Europe.
There has been a lot of speculation among investors regarding the IPO launch date in 2023, the earliest being in March.
Arm Holdings eventually announced that it would open its doors to investors on September 14th, 2023, on the Nasdaq, in what is considered to be the year’s biggest market floatation.
At the beginning of September, Arm Holdings announced the launch of its IPO roadshow, meeting with a number of potential investors.
The company is now expecting to issue 95.5 million ADS at a price of $47 to $51 each. This would give Arm a valuation of up to $52 billion, lower than the initial target range of $60-70 billion. Despite concerns about the company´s high exposure to China and slower growth, it is still set to be the hottest IPO of the year as Arm aims to ride the AI wave.
Initially, SoftBank was targeting a valuation of $60 billion, which is almost double the amount it paid for it in 2016, according to Bloomberg. However, Arm’s revenue in 2022 was about $2.6 billion, making the company worth about $24 billion if investors value it at the average market capitalisation-to-revenue ratio of the Philadelphia Stock Exchange Semiconductor Index. Therefore, Arm’s IPO might not be as lucrative as its planned deal with Nvidia. Global investment banks are pitching valuations from $30 billion to $70 billion.
SoftBank’s decision to launch the IPO on the Nasdaq stock exchange was a move that could be seen as a lost opportunity for the UK tech industry. A UK listing could benefit the local economy and boost the stock market.
With Arm having a ‘near monopoly’ over parts of the market, the listing could be one of the hottest IPOs in 2023.
Nvidia is in talks with Arm to take a long-term stake in the company at the time of its initial public offering as an anchor investor. The American multinational is seeking a share price that could value Arm at between $35bn and $40bn, according to the FT. This move comes nearly 18 months after Nvidia's bid to acquire Arm fell through.
This could lead to increased competition and innovation. Arm is a leading supplier of chip designs for smartphones, servers, and other devices, and its technology is also essential for many artificial intelligence applications. By investing in Arm, Nvidia could gain access to Arm's technology and customer base, which would give it a significant advantage over its rivals.
Arm´s upcoming initial public offering - already set to be the biggest tech IPO since Alibaba - is heating up with Apple, Amazon, and Samsung looking to become anchor investors as well. The interest from these tech giants is a major vote of confidence and highlights Arm's significance in the sector. The IPO could raise as much as $10 billion, with a projected valuation of $60 to $70 billion.
Amazon is one of Arm´s biggest customers, accounting for more than half of Arm-based server CPUs currently being used. Apple and Samsung are also major clients.
An Initial Public Offering (IPO) is an investor’s first chance to gain exposure to an organisation. An IPO is an important milestone for a company looking to raise capital and an opportunity for investors to get involved in a hopefully growing business.
With Axi you can get exposure to Arm Holdings IPO as soon as it’s listed on a specific exchange and prices from the exchange become available to our liquidity providers.
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