According to a recent filing with the US Securities and Exchange Commission, Arm wants to raise $4.87 billion for its initial public offering (IPO) on the Nasdaq.
The deal could value the company at $52 billion. Arm was listed in London and New York before being acquired by SoftBank for $32 billion in 2016.
As a British company, Arm is classified as a foreign private issuer in the US and its shares are counted as American depositary shares (ADSs).
Arm will list 95.5 million ADSs at prices ranging from $47 to $51, raising $4.49 to $4.87 billion, respectively, and valuing the shares at between under $50 billion and $52 billion.
With its US IPO, Arm has access to new capital to increase its R&D investment, especially as it looks to grow in the AI space with new chips. The company recently launched several chips dedicated to AI and machine learning.
With only 9.4% of Arm shares freely traded on the Nasdaq, SoftBank is expected to own about 90.6% of outstanding shares after the IPO is completed.
Arm’s deal is expected to be the biggest tech IPO of the year, with investors hoping the listing will breathe new life into an IPO market that has been largely frozen since 2022.
Macro and geopolitical challenges — from the Russia-Ukraine conflict to rising central bank interest rates — led to a major drop in tech valuations last year, causing many tech companies to reconsider their decision to go public.
Arm sees huge revenue potential for its technology. In its IPO filing, the company said its total available market (TAM) in 2022 was $202.5 billion. That could grow to $246.6 billion by the end of 2025, representing a 6.8% annual increase.
Its energy-efficient processor designs and software platforms are found in more than 250 million chips worldwide, used in a wide range of products from sensors to smartphones to supercomputers.
Arm is estimated to have approximately 48.9% of the semiconductor design market. Other players like Intel and AMD are racing to design their own chip architectures, but have so far struggled.
According to Arm’s filing, Apple, Alphabet, Nvidia and other tech companies are interested in buying $735 million worth of Arm shares. Intel, Samsung, TSMC, AMD, MediaTek are also interested. It shows the importance of Arm and its products and services.
Tech IPOs have been rare in the past two years, as investors have been reluctant to bet on hot growth companies. Arm, founded in 1990, is different. In the second quarter of 2023, it earned $105 million on revenue of $675 million.
In 2020, Nvidia announced plans to buy Arm from SoftBank for $40 billion, but was blocked by US and UK regulators. Both sides abandoned the deal in 2022, paving the way for Arm’s US IPO.
(According to CNBC)
Source
Comment (0)