2023-09-10 22:11:41
(More on the IPO) by Echo Wang and Anirban Sen
NEW YORK, Sept 10 (Archyde.com) – Arm, the chip designer owned by SoftBank Group Corp 9984.T , is poised to get enough investor support to reach fully diluted valuation of 54.5 billion it was seeking in its initial public offering (IPO) at the high end of its stated range, and plans to ask investors to price it at a higher level, people familiar with the matter said Sunday. subject.
Following strong investor demand, Arm will likely be able to price the IPO at or above its $47 to $51 per share range when its underwriters close their books Wednesday on the largest U.S. stock market debut in two years, the sources said.
Arm is discussing the possibility of increasing the price range and seeking a valuation above $54.5 billion, given the IPO’s oversubscription, the sources said. Separately, Arm is also considering keeping the price range as is and pricing the IPO above that range on Wednesday, which would also lead to a valuation above $54.5 billion, they said. added the sources.
Arm will not offer more shares, however, as SoftBank wants to retain a 90.6% stake in Arm after the roughly $5 billion IPO, as originally planned, the sources said .
The decision on whether to increase the price range will be made in the next two days, after key orders from investors are received on Monday, one of the sources said.
The sources, who spoke on condition of anonymity to discuss confidential deliberations, cautioned that some anticipated investor commitments had not been finalized and the order trajectory could still change.
SoftBank and Arm did not immediately respond to requests for comment.
The valuation Arm has sought so far represents a drop (link) from the $64 billion valuation at which SoftBank acquired the 25% stake it did not previously own in the company last month from the Vision Fund (link) that it manages and which amounts to 100 billion dollars.
However, even with that lower valuation, SoftBank would fare better than its $40 billion deal to sell Arm to Nvidia Corp NVDA.O, which it abandoned last year due to opposition from competition regulators. .
Arm has already signed (link) many of its major customers as anchor investors in its IPO, including Apple AAPL.O, Nvidia, Alphabet GOOGL.O, Advanced Micro Devices AMD.O, Intel
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et Samsung Electronics
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Arm launched its IPO marketing efforts (link) last week, seeking to convince investors that it has growth ahead of it beyond the cellphone market, which it dominates with a 99% share.
Weak demand for mobile telephony amid a global economic slowdown has led to stagnation in Arm’s revenues (link). Overall revenue was $2.68 billion in the 12 months to the end of March, up from $2.7 billion in the prior period.
Arm told potential investors in New York on Thursday (link) that the cloud computing market, in which it only has a 10% share and therefore has greater room to grow, should grow at an annual rate of 17% through 2025, driven in part by advances in artificial intelligence. The automobile market, of which it holds 41%, is expected to grow by 16%, compared to only 6% for the mobile telephone market.
Arm also told investors that its royalties, which make up the majority of its revenue, have been accumulating since it began collecting them in the early 1990s. These revenues totaled $1.68 billion. of dollars in the last fiscal year, compared to $1.56 billion the year before.
Arm’s exposure to China (link) has received particular attention from investors, given geopolitical tensions with the United States that have led to a race for security. chip supply. Sales in China contributed 24.5% to Arm’s fiscal 2023 revenue of $2.68 billion.
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