ARM Targets $60 Billion Valuation For IPO

The owner of Cambridge-based chip designer ARM Holdings is seeking a valuation, for what could be one of the largest IPOs in the history of tech.

Bloomberg, citing people familiar with the matter, reported that ARM owner Softbank is targeting an initial public offering at a valuation of between $60 billion and $70 billion for the chip designer, as soon as September.

Bloomberg noted that the hefty valuation is a sign of bullish interest in artificial-intelligence (AI) chips.

ARM IPO

According to the report, the roadshow for the listing of ARM is scheduled to start the first week of September, with pricing for the IPO the following week.

An IPO roadshow is typically a series of events leading up to the listing, that give a company the opportunity to showcase its value proposition, impress potential investors, and ultimately increase their buy-in.

The latest target for ARM’s valuation underscores a shift in market mood in favour of technologies linked to generative AI and chips, the Bloomberg report noted.

Earlier this year, bankers were pitching a range of valuations for the British chip designer from $30 billion to $70 billion, Bloomberg News has previously reported.

ARM executives may still be seeking a valuation as high as $80 billion, but the odds of achieving this are “uncertain,” the Bloomberg source reportedly stated.

ARM is seeking to raise as much as $10 billion from the listing, but SoftBank intends to retain a controlling stake in ARM after the IPO, whoever takes a stake in the chip designer.

Raising this much money would make it one of the biggest-ever IPOs in the history of the tech industry.

Indeed if it does raise $10 billion, it would rank the ARM listing as third only to Alibaba, after it raised $25 billion in its 2014 IPO, and Meta (Facebook) which in May 2012 raised $16 billion in its IPO.

Dual listed

ARM has been planning this IPO for some time now, but this will be the second time it has returned to public listed status.

ARM was formed in 1990 when it was spun out of Acorn Computers, and its chip designs are used in 95 percent of smartphones due to their low power consumption.

This makes ARM a major force in the semiconductor market, and it licensing its designs to some of the world’s largest consumer tech manufacturers including Qualcomm and Apple.

Japan’s SoftBank had acquired ARM for $32bn in 2016.

Before that, ARM was actually dual-listed in London and New York until the 2016 SoftBank acquisition – an acquisition the UK government at the time welcomed, despite concern at ARM falling into the hands of a foreign entity.

Route to IPO

But how did ARM decide to return to the public markets?

It should be remembered that in February 2022 Nvidia’s attempted $40bn purchase of ARM was called off, due to “significant regulatory challenges”.

The UK government had at the time, led that global challenge to the deal, and strongly indicated it would block it on national security grounds.

Soon after the Nvidia deal fell through, Softbank’s Masayoshi Son in February 2022 indicated that the US Nasdaq would be the most likely listing destination for ARM.

The head of Japan’s SoftBank then reiterated this stance in June 2022.

Then in May 2023 ARM registered for a US public listing with the US Securities and Exchange Commission.

That registration rebuffed the charm offensive from a number of British Prime Ministers to get the firm to consider a dual listing in both London and New York.

The IPO process heated up in June when it was reported that ARM was in talks with some of its biggest customers and end users about bringing on one or more ‘anchor investors’ in the IPO.

Then in July it was reported ARM was talking to its former suitor Nvidia to be an anchor investor.

ARM has reportedly talked with others including Intel, Alphabet, Apple, Microsoft, TSMC, and Samsung Electronics, about their potential participation in the IPO.