Tech Investors Raise Their Glasses as Arm Takes the First Step Towards IPO
In 2023, tech investors were not toasting to IPOs, but that may soon change. Phone chip designer Arm has confirmed that it has embarked on the path to what is anticipated to be the biggest IPO of the year. This news has generated excitement in the tech industry, as Arm has transformed from an obscure parts maker to one of the major players in the field. Arm is responsible for developing the semiconductors that power 99% of all smartphones worldwide. With its headquarters in Cambridge, UK, the company is owned by Japan’s SoftBank.
Arm has engaged the services of Barclays, Goldman & Sachs, JPMorgan, and Mizuho Securities USA for its IPO listing. The F-1 submission to the US Securities and Exchange Commission reveals that the proposed terms of the stock sale have not been disclosed, including the number of shares being offered and their valuation. However, Bloomberg reports that Arm is targeting a valuation between $60 billion and $70 billion and has already entered discussions with its largest clients about supporting its Nasdaq listing.
The decision to go public now stems from the increasing demand for Arm’s products. As everyday life becomes more digital, the need for high-performance and energy-efficient semiconductors continues to grow. Arm acknowledges that expertise in this area is hard to find and that design partners play a crucial role in the chip process. These partners provide skills and expertise that enable critical differentiation between products.
While the valuation of Arm remains speculative, the recent acquisition of a 25% stake in Arm by SoftBank for $16.1 billion could suggest a value of $64.4 billion. Arm, however, has dismissed any correlation between the purchase price and its IPO valuation.
A successful IPO for Arm would not only benefit the company but also SoftBank founder Masayoshi Son, whose net worth has seen a decline partly due to the problems at Vision Fund, which lost $32 billion in 2022. A successful debut could also inject some energy into an otherwise lackluster IPO market. Notably, Birkenstock and Instacart are reportedly considering IPOs.
However, Arm’s business in China presents concerns. The company operates in the country through an independent entity called Arm Technology Co., and even though SoftBank owns a 48% stake in Arm China, local investors control the rest. This lack of control and the tensions between the US, UK, and China pose risks for Arm. Arm China accounts for 24% of the company’s sales, and any deterioration in the relationship could have a significant adverse impact on their ability to compete in the Chinese market.
Despite the risks, Arm has disclosed them in its F-1 submission, including other potential challenges such as inflation, another pandemic, and a failure to continue investing in research and development.
In conclusion, the news of Arm’s IPO has sparked excitement among tech investors, signaling a potential shift in the IPO market. Arm’s strategic position in the tech industry, coupled with the increasing demand for its products, sets the stage for a promising debut. While challenges exist, particularly in the Chinese market, Arm’s decision to go public reflects its optimistic outlook for future growth. As the IPO unfolds, all eyes will be on Arm, and its success could potentially impact not only SoftBank but also the broader IPO landscape.
—————————————————-
table {
width: 100%;
border-collapse: collapse;
}
th, td {
padding: 10px;
text-align: left;
border-bottom: 1px solid #006699;
}
th {
background-color: #006699;
color: #FCB900;
}
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
Tech investors had little reason to toast to IPOs in 2023 — but it looks like that’s about to change. This week, phone chip designer Arm confirmed that it has taken the first step towards what is widely touted as the biggest IPO of the year.
Cambridge, UK-based Arm has grown from an obscure parts maker into one of the major players in the technology industry, and is the developer of the semiconductors that power 99% of all smartphones in the world.
The company owned by Japan’s SoftBank, revealed it had worked BarclaysGoldman & Sachs, JPMorgan and Mizuho Securities USA on the listing, with 24 other subscribers also listed in the filing.
In the F-1 Submission Arm, which was submitted to the US Securities and Exchange Commission, did not disclose the proposed terms of the stock sale — neither the number of shares being offered nor their valuation.
However, Bloomberg reports that the company is targeting a valuation between $60 billion and $70 billion and has already held discussions with some of its companies largest clients about supporting its Nasdaq listing.
Arm declined to comment when approached by him Assets.
Why lists arm
The F-1 document also provides clues as to why Arm decided to go public now: The company is benefiting from an ever-growing need for its products.
“Semiconductors are essential to everyday life,” Arm wrote. “As consumers and businesses continue to demand more from their devices, the adoption of high-performance and energy-efficient semiconductors will continue to increase.”
Among the trends driving growth, Arm says, is an “increasingly digital world,” which in turn requires “greater demand for.” powerful, energy-efficient computing power.”
Expertise in this area is also difficult to find, the company notes, adding that design partners play an “increasingly valuable role” in the chip process by providing skills and expertise that enable critical differentiation between products.
No rating notes
While viewers may be sniffing for clues as to how high Arm’s valuation might go, the company has firmly denied any leads stemming from the purchase price offered to parent company SoftBank in a recent deal.
In August 2023, SoftBank acquired a 25% stake in Arm from venture capital fund Vision Fund.
Both companies are owned by SoftBank founder Masayoshi Son, though the equity fund is suffering Lost $32 billion last year.
This summer’s deal saw the SoftBank giant acquire Vision Fund’s stake in Arm for $16.1 billion, with associated payments to be made in installments over two years.
Extensive calculations could therefore put Arm at a value of US$64.4 billion, an estimate which Arm is reluctant to deny, writing: “The purchase price was paid by… SoftBank Group The acquisition of shares in Arm Limited by the SoftBank Vision Fund may not be, and should not be viewed as, indicative of the trading price of our American Depositary Shares (ADSs) following the closing of this Offering.”
It continues, “Investors are cautioned that the purchase price paid for Arm Limited shares may not be indicative of, and is not intended to reflect, expectations as to the trading price of our ADSs.”
A successful IPO could bode well for a number of viewers — not the least of which is SoftBank founder Son. According to the billionaire, his net worth has fallen by around $2 billion since July Bloomberg billionaire indexpartly triggered by the problems at Vision Fund.
A successful debut would not only bolster Son’s finances, but could fuel an otherwise subdued IPO market. cobbler Birkenstock is reportedly eyeing an IPOwith Bloomberg also reports on a food delivery company instacart should be listed in September.
The China Question
A large part of Arm’s business is inevitably conducted in China.
The company operates on-site businesses through an independent entity called Arm Technology Co., with neither Arm nor SoftBank controlling the business.
SoftBank owns a 48% stake in Arm China, but the rest has been bought by local investors.
A shine lack of control over such a company– which former CEO Allen Wu also attended refuses to give up his role despite its dismissal in May last year — is giving investors a headache, especially since Arm China accounted for 24% of Arm’s sales in fiscal 23.
According to the IPO, “Our concentration of revenue in the People’s Republic of China (PRC) market makes us particularly vulnerable to economic and political risks in the PRC, which are exacerbated by tensions between (on the one hand) the US or the UK could and (on the other hand) the PRC in terms of trade and national security.”
“We rely on our relationship with Arm China to gain access to the PRC market,” continued Arm. “If this business relationship ceases or deteriorates, our ability to compete in the PRC market could be materially and adversely affected.”
The China woes are just one of many risks Arm had to legally disclose in order to go public with an IPO — others include inflation, another pandemic, and a failure to continue investing in research and development.
Of course, Arm won’t be the only company nervously looking east.
Minister of Finance Janet Yellen Said the slowdown in China’s economy is a “risk factor” for the domestic economy, adding, “China’s slowdown will have the biggest impact on its Asian neighbors, but there will be some impact on the United States.”
—————————————————-