British technology company Arm Holdings is expected to go public in 2023 in a highly-anticipated 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 pandemic. As a result, SoftBank decided to float Arm’s shares in 2023, potentially planning a dual listing on New York’s Nasdaq alongside the London Stock Exchange.
|Number of employees||7,170|
|Revenue 2021||$2.7 billion|
|Stock Exchange||Nasdaq or London Stock Exchange|
|Potential Valuation||$30 to $70 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.
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 was planning to launch the IPO on the Nasdaq stock exchange, a move that was widely seen as a lost opportunity for the UK tech industry. A UK listing could benefit the local economy and boost the stock market. A dual listing on the Nasdaq and the London Stock Exchange is now a strong possibility, and it could potentially raise the value of Arm shares. However, it remains to be seen if the dual listing compromise will eventually take place.
With Arm having a ‘near monopoly’ over parts of the market, the listing could be one of the hottest IPOs in 2023.
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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