Arm Holdings had a blockbuster listing, rising nearly 25 percent on its debut in Nasdaq.
The SoftBank-owned company became the biggest IPO of the year after it secured a valuation of $54.5 billion by pricing it at the top end of the marketed range. The IPO netted $4.87 billion for the Japanese investment company, which still holds a 90.6 percent stake.
The chip manufacturer’s stock was priced at $51 – pegged at highest in the range of $47-$51 as it sold 95.5 million shares – in the IPO. It opened at $56.10 and by the end of the trading day, it had notched a 24.68 percent gain to close at $63.59. That gave the British chip designer a valuation of $65 billion as it returned to public markets following a seven-year absence.
Softbank took the company private in 2016 for $32 billion. In 2020, it agreed to sell the company to chipmaker Nvidia, but the $40 billion deal hit regulatory roadblocks.
Experts are looking at the successful listing as not just a boost to the tech industry, but also for the IPO market. Grocery delivery company Instacart and advertising company Klaviyo are just two of the companies going public soon and can ride on the positive momentum.
Founded in 1990 in Cambridge, England, the manufacturer’s chip designs power nearly every smartphone in the world. It disclosed last month that its annual revenue had dropped 1 percent as its two largest markets – smartphones and personal computers – slumped. However, a Gartner estimate said the rise of artificial intelligence will result in a total business of $120 billion by the end of 2027.
The company estimates about 70 percent of the world’s population uses Arm-based technology across all markets. Its customers include Apple, Google, Nvidia and Samsung among others.
CEO Rene Haas celebrates Arm’s milestone
In a company blog post, CEO Rene Haas wrote: “Today in New York and Arm sites worldwide, we are celebrating our re-entrance into the public markets and our next phase in building the future of computing.
“Together, we have built the world’s largest compute and software ecosystem based on the most pervasive CPU architecture in history. More than 250 billion Arm-based chips have shipped to date, making Arm CPUs the brains of everything. This shared success stems from the Arm DNA, born of designing high-performance, yet power-efficient processors for products that run off batteries.
“These design principles are why Arm-based chips have powered more than 99 percent of the world’s smartphones for more than a decade. And today, it is why the Arm going public in 2023 looks much different than the one SoftBank took private in 2016, as every end market requires greater power efficiency combined with more performance.
“As CEO of Arm, it is our opportunity to bring AI to everyone, everywhere and that excites me most. Seventy percent of the world’s population relies on Arm technology today, putting us in a unique position to advance AI across all devices. And as a public company, Arm is in a stronger position to strengthen our already talented engineering team and invest in more AI opportunities.”
Softbank had recently purchased remaining shares of Arms from the market a few weeks ago at a valuation of $64 billion, which was way above the initial valuation of the stock when it was offered to the market at $51 each.
Masayoshi Son, SoftBank’s chief executive, told CNBC in a recent interview that he paid at $64 billion valuation because of his confidence in Arm’s future and that he expected the stock to have “good upside” over the long term.
The IPO is expected to close on September 18, 2023, subject to customary closing conditions.
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