SoftBank’s Arm files for IPO that could be 2023’s biggest

Arm Holdings didn’t disclose proposed terms for the share sale in its filing with the US Securities and Exchange Commission

by Bloomberg

August 22, 2023

Image credit: Getty Images

SoftBank Group semiconductor unit Arm filed for what is set to be the year’s largest US initial public offering (IPO), disclosing key details of its finances and giving struggling equities markets their biggest lift in almost two years.

Arm Holdings didn’t disclose proposed terms for the share sale in its filing Monday with the US Securities and Exchange Commission.

The company plans to start its roadshow the first week of September and price the IPO the following week, seeking to be valued in the listing at $60bn to $70bn, Bloomberg News has reported.

While Arm had been aiming to raise $8bn to $10bn in the IPO, that target could be lower since SoftBank has decided to hold onto more of the company after buying Vision Fund’s stake in it.

The offering is being led by Barclays, Goldman Sachs Group, JPMorgan Chase & Co. and Mizuho Financial Group. The filing lists 24 other underwriters below that top tier.

The listing is set to be the largest in the US since electric-vehicle maker Rivian Automotive.’s $13.7bn offering in October 2021. It could rank near or even just below the tech industry’s largest-ever IPOs: Alibaba Group Holding’s $25bn 2014 offering and 2012’s $16bn debut by Meta Platforms, then known as Facebook.

A successful debut by Arm’s debut would provide a welcome relief for SoftBank founder Masayoshi Son, whose Vision Fund lost a record $30bn last year. It could also spur dozens of startups such as online grocery delivery company Instacart and marketing and data automation provider Klaviyo to follow through on — or further delay — their own IPO plans.

Arm’s target valuation underscores a shift in market mood in favour of technologies linked to artificial-intelligence (AI) chips and generative AI.

While the Cambridge, UK-based company’s technology is used in almost every smartphone, its place in the industry has long been obscure. Arm sells the blueprints needed to design microprocessors, and licenses technology known as instruction sets that dictate how software programs communicate with those chips. The power efficiency of Arm’s technology helped make it ubiquitous on phones, where battery life is critical.

Rene Haas, who took over as Arm’s chief executive officer last year, is now working to expand beyond the smartphone market, which has stagnated in recent years. He’s targeting more advanced computing, particularly the chips for data centers for cloud computing and artificial intelligence applications.

Processors for that market are among the most expensive — and profitable — in the industry. Amazon.com Inc. has adopted Arm-based chips for its Amazon Web Services because it says they are more efficient both in terms of energy and economics. They are used by 40,000 AWS customers.

SoftBank will remain the controlling shareholder of Arm after it begins trading, according to the filing. SoftBank has acquired substantially all of the Vision Fund’s 25 per cent stake in Arm for $16.1bn, according to the filing.

The filing confirms that Arm saw its revenue decline about 1 per cent in its last fiscal year. Its sales fell to $2.68bn for the year ended March 31, according to the filing, which is still subject to change.

Arm plans for its shares to trade on the Nasdaq Global Select Market under the symbol ARM.