Nasdaq in New York will hold IPO due to UK government’s unsuccessful push for tech firm’s UK listing
Arm, the UK chip designer owned by SoftBank, has initiated the listing process for its shares on Nasdaq in New York. This substantial flotation follows London Stock Exchange’s missed opportunity, with the registration occurring after a prolonged wait due to challenging market conditions.
After being taken private by SoftBank in a £24bn deal led by Masayoshi Son in 2016, Arm is set to rejoin the stock markets. Recent reports suggest that an internal SoftBank transaction in the current month appraised Arm at $64bn (£50bn).
Hailing from Cambridge, Arm stands as a rare prominent tech player in the UK. Established in 1990, it has been pivotal in the mobile computing evolution, contributing designs for semiconductor chips in Apple’s iPhones, Samsung’s phones, laptops, and a diverse array of gadgets such as electric cars, drones, and autonomous vehicles. Its chip blueprints have left an impact on over 250 billion devices.
Although the company’s origins lie in the UK, the decision to list in New York follows an unsuccessful attempt by the British government, spearheaded by Rishi Sunak, to encourage both Arm and other tech firms to go public on the London Stock Exchange.
This listing marks SoftBank’s second endeavor to capitalize on its investment. Back in 2021, the technology-focused investor struck a $40 billion agreement to sell Arm to US chipmaker Nvidia. Nevertheless, this deal collapsed the following year due to objections from UK competition regulators.
In the period up to March, according to the US filing, Arm’s designs were used in the production of 30.6 billion chips, a rise from 29.2 billion the previous year. However, revenues remained steady at $2.7 billion, while net income decreased from $676 million to $524 million.
Arm has not disclosed the quantity of shares it plans to offer or its targeted valuation, though SoftBank will retain control over the firm. Notably, the IPO will not generate any proceeds for Arm itself.
Anticipating a 6.8% annual growth in the chip market until 2025, Arm stated that the increasing intricacy of semiconductors, essential for powering smartphones and training AI algorithms, will enable the company to enhance its contribution to the overall value of each chip.
The filing unveiled that a significant portion of Arm’s revenue, about 25%, comes from China. Arm acknowledged this dependency and highlighted its vulnerability to economic and political risks. This exposure becomes particularly pronounced in light of ongoing efforts by the US government to restrict China’s access to cutting-edge chip-making technology. Arm expressed concerns that regulations from the US, UK, or China could have a substantial negative impact on its business.
Rene Haas, the CEO of Arm, has been granted $20 million in stock and stands to receive an additional $20 million in cash if the listing successfully concludes.
Barclays, Goldman Sachs, JP Morgan, and Japan’s Mizuho have been chosen to lead the initial public offering for Arm’s shares, and an additional 24 banks are poised to share in the fees for this significant deal.
