Arm Announces IPO Pricing at $51 per Share at Valuation of $54B with Trading on Nasdaq Set to Begin Today
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Arm Announces IPO Pricing at $51 per Share at Valuation of $54B with Trading on Nasdaq Set to Begin Today
Arm Holdings plc, a subsidiary of SoftBank that specializes in the design of Semiconductor and Software products, announced the pricing of its long-awaited Initial Public Offering (IPO) at $51 per each of the 95.5 million American Depositary Shares (ADS). The company’s shares are expected to begin trading at the Nasdaq Global Select Market on Thursday under the ticker symbol ARM. According to the announcement, SoftBank Group Corp has granted the underwriters an option to purchase an additional 7 million ADS shares to cover over-allotments.
Reportedly, SoftBank will have the majority control of about 90 percent of the Arm shares after the IPO. Some of the expected investors in the Arm IPO include its current customers led by Apple Inc (NASDAQ: AAPL), Nvidia Corp (NASDAQ: NVDA), Samsung, and Taiwan Semiconductor Manufacturing Company, among others.
The semiconductor manufacturing behemoth will have a starting market valuation of about $54 billion following the IPO that begins today and ends on September 14. Notably, Raine Securities LLC will act as financial advisor while Barclays, Goldman Sachs, JPMorgan, and Mizuho will act as joint book-running managers for the IPO.
Arm and Its Market Outlook before Its IPO
According to the company’s prospectus, its revenue for the fiscal year that ended in March dropped by a margin of about 1 percent from the prior year to $2.68 billion. Notably, Arm’s net income for the fiscal year 2023 dropped by about 22 percent to $524 million. The company has attracted much investor’s attention following the heightened demand for artificial intelligence (AI) technology around the world.
This is the second time that Arm is going public since it was founded in 1990. SoftBank acquired the company back in 2016 for about $32 billion. Interestingly, three of the company’s largest customers account for about 44 percent of its total revenue. Arm China, an independent entity, accounted for about 24 million percent of the company’s revenue during the fiscal year 2023. Qualcomm Inc (NASDAQ: QCOM) ostensibly accounted for about 11 percent of the company’s revenue in fiscal year 2023 despite the ongoing lawsuit over licensing violations.
According to the company, more than 250 billion chips are used to power products all over the world, thus playing a crucial role in the mainstream adoption of artificial intelligence. Some of the Arm’s CPUs and NPUs include Cortex-A, Cortex-M, Cortex-R, Neoverse, Ethos and SecurCore. Other notable Arm products include software and development tools like Keil RTX5.
The company is, however, facing immense pressure from other chip manufacturing companies from China and the United States including Nvidia. Nonetheless, experts believe going public will help Arm navigate the regulatory landscape more easily than a private company.