16/04/2024

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SoftBank-backed Arm targets bn-bn valuation range as it pitches IPO

SoftBank-backed Arm targets $50bn-$55bn valuation range as it pitches IPO

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Chip designer Arm is targeting a valuation range of $50bn-$55bn in its initial public offering, below the $64bn given by its owner SoftBank in a transaction less than a month ago, according to people familiar with the plans.

Arm plans to start its IPO roadshow next week, and several of its largest customers in the technology sector have agreed to take part in the listing, including Apple, Samsung, Intel and Nvidia, according to one of the people. It has also discussed potential investments with some of its customers in the car industry, according to a second person close to the matter.

SoftBank last month agreed to pay $16bn for the 25 per cent stake in Arm that it did not directly control from the Vision Fund, an investment fund that it manages. The Japanese conglomerate has previously tried to convince investors that Arm should be valued closer to $80bn.

One person familiar with Arm’s plans stressed, however, that SoftBank was still optimistic that the final valuation would be higher than the initial range. The latest target valuation range was first reported by The Wall Street Journal.

A person involved in the deal said preliminary meetings “testing the waters” with investors had gone well, and said it was a common tactic for dealmakers on large tech listings to start roadshows with a conservative price range to help build momentum.

Nvidia declined to comment. Apple, Intel and Samsung did not immediately return a request for comment.

SoftBank is planning to sell about 10 per cent of Arm in the IPO, with the strategic investors providing a relatively small portion of the more than $5bn that will be raised.

Arm is set to be the most valuable US IPO since November 2021, when carmaker Rivian listed with an initial valuation of $70bn.

The deal is being closely watched as a test of investor appetite for large listings after one of the most severe dealmaking downturns in decades.