Arm IPO to kick off today with company valued at $54.5 billion
- Reference: 1694698086
- News link: https://www.theregister.co.uk/2023/09/14/arm_ipo/
- Source link:
Britain's chip design and licensing outfit said in a [1]statement that its shares are expected to begin trading on the Nasdaq Global Select Market in New York on September 14 under the symbol ARM.
There has already been huge interest in this IPO, which resulted in Arm closing orders for shares a day earlier than planned this week due to its stock being more than five times oversubscribed, according to the [2]Financial Times . This interest could push the share price higher than the initial $51 once trading begins.
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At this price, the IPO is reportedly set to raise about $4.9 billion for Arm’s parent company, Softbank, which is less than the $8-$10 billion the Japanese investment outfit had previously said it hoped to generate. Softbank itself [4]posted a record $39 billion loss earlier this year.
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Arm will continue to remain under the control of Softbank after the stock sell off, however, as [7]reported by The Register earlier this year when the chip designer first filed for its public listing. Softbank issued a statement saying that: "SBG (Softbank) intends that Arm will continue to be a consolidated subsidiary of SBG following the completion of the proposed initial public offering."
The valuation of Arm at $54.5 billion is also lower than the $60-$70 billion that Softbank was said to be aiming for, a figure based on the estimated value of the proposed sale of Arm to GPU maker Nvidia at the time [8]the deal fell through last year. It is still likely to make it the largest IPO in the US this year, however.
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That proposed sale fell through due to the "significant regulatory challenges" it faced from authorities in various countries, as well as opposition from other tech companies who feared that Nvidia might limit access to Arm technology for other licensees.
The IPO has instead generally met with broad approval, with many big names in the industry such as [10]Apple, Samsung, and Intel stepping up to take a sizable stake in the Brit chip company.
[11]Financial red tape blamed for London losing Arm IPO
[12]Arm files for IPO – and SoftBank will retain control
[13]Lightning struck: Apple switches to USB-C for iPhone 15 lineup
[14]Linux on the Arm-based Thinkpad X13S: It's getting there
This is one reason why the UK government was hopeful that the IPO might be a dual-listing, with Arm shares going up for sale on the London stock exchange as well as New York. Those [15]hopes were dashed earlier this year, when the company confirmed it would list only in the US, blamed by some on financial red tape.
According to [16]Nikkei Asia , the IPO has four lead underwriters, comprising Barclays, Goldman Sachs, JP Morgan, and Mizuho USA. There is also a second tier of banks, including Bank of America and Citigroup. ®
Get our [17]Tech Resources
[1] https://www.arm.com/company/news/2023/09/arm-announces-pricing-of-initial-public-offering
[2] https://www.ft.com/content/3bc383db-a0c2-4e30-81c4-d09a185605c2
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZQMuJhiFlqWPaxGQEJyEEwAAAw8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.ft.com/content/1dd470c2-be80-4887-83cc-87be93100a12
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZQMuJhiFlqWPaxGQEJyEEwAAAw8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZQMuJhiFlqWPaxGQEJyEEwAAAw8&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2023/05/01/arm_ipo_confirmed/
[8] https://www.theregister.com/2022/02/08/arm_cancels_sale_to_nvidia/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZQMuJhiFlqWPaxGQEJyEEwAAAw8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2023/08/09/softbank_q1_2023_arm_ipo/
[11] https://www.theregister.com/2023/03/06/fca_rules_arm_listing/
[12] https://www.theregister.com/2023/05/01/arm_ipo_confirmed/
[13] https://www.theregister.com/2023/09/12/apple_announces_iphone_15_lineup/
[14] https://www.theregister.com/2023/09/08/linux_on_the_thinkpad_x13s/
[15] https://www.theregister.com/2023/03/06/fca_rules_arm_listing/
[16] https://asia.nikkei.com/Business/Markets/IPO/SoftBank-puts-stamp-on-Arm-IPO-as-Mizuho-wins-top-underwriter-spot
[17] https://whitepapers.theregister.com/
Re: British chip designer to trade on Nasdaq only
To summarise, Softbank bought Arm in 2016 for ~twenty years worth of ARM's yearly revenue and ~64 times their yearly profits, presumably hoping to shove up the licensing fees to make up for this, however when they tried to quadruple the license fees people started looking at switching to other things (eg RISC-V) and Softbank realised that they'd fucked up and dropped the prices back again leaving them with a business they'd hugely overpaid for.
So to improve matters, they sold a majority stake in ARM China to entities controlled by the Chinese Communist Party in 2018.
They are then surprised that the above has rather different objectives to Softbank, and that the China operation is now operating for the benefit of China rather than the ARM board. They then try and recoup their huge capital investment by selling ARM to NVIDIA, who would only want it to try and create a tech monopoly ala Intel. This is rightly blocked by competition authorities to maintain some semblance of competition. Softbank is still stuck with a huge capital investment that is not going to pay off for a century or so and so is listing ARM to try and persuade idiots to buy it off of them at well above what it's objectively worth.
[1]The FT published this article 6 months ago which contains this gem:
One official said: “The expectation was never very high for them to list in the UK. We would have basically had to rip up listing rules and dramatically water down corporate governance standards.”
The article and comments on it appears to give the impression that UK investors have a culture that does not encourage investing money in heavily overvalued companies with poor underlying financials, and our regulators [the FSA] don't like unbacked bombastic statements that inflate the value of a company, whereas poor underlying financials combined with bombastic statements drastically overvaluing companies appears to be accepted and encouraged in the US.
While we will of course "lose" those businesses to the US stock exchanges in the short term, when the bubble bursts on the hugely overvalued tech companies in the US then presumably there will be screamed questions at the regulators that enabled losing hundreds of billions.
[1] https://www.ft.com/content/40a0f9c1-3be1-4973-a473-3893a1675d28
All a mess
Fucking tories selling it off. I owned some shares when they were a UK company, then they got sold of so all our shares got purchased. Now if I wanted to buy again I have to do it via a US trade.
Re: All a mess
AFAICS it was you who sold off your shares. There are many things for which to blame HMG but is selling Arm one of them?
Re: All a mess
From an investment point of view, when somebody wants to buy something for many times what it's worth you say "thank you" and once they hand over the money you then cackle in private.
British chip designer to trade on Nasdaq only
So much for Singapore on Thames.