SoftBank CEO Masayoshi Son against a backdrop illustrating SoftBank Group and the Arm unit in 2016.
Bloomberg | Bloomberg | Getty Images
Chip design firm Arm on Tuesday said it is looking to fetch as much as $4.87 billion in its upcoming blockbuster initial public offering on the Nasdaq stock exchange in New York, according to a fresh filing.
The deal could value the company at as much as $52 billion.
Arm submitted its updated F-1 filing with the U.S. Securities and Exchange Commission, setting out its ambitions to once again become a publicly listed company. It was previously dually listed in London and New York, before SoftBank acquired it for $32 billion in 2016.
As a British company, Arm qualifies as a foreign private issuer in the U.S. and its shares will count as American depositary shares, or ADSs. The company will list 95.5 million ADSs at a price range between $47 and $51. At the upper end of that range, CNBC estimates that Arm will likely raise up to $4.87 billion. At the lower end, the IPO would fetch $4.49 billion of fresh capital for Arm.
When the company floats in New York, it will look to tap into a deep pool of institutional funds. Arm seeks to ramp up its investments in research and development, particularly as it pursues growth in the artificial intelligence space with some of its newer chips. The company recently released new chips specifically targeted at AI and machine learning use cases.
At the upper end of the pricing range, Arm would also attain a total valuation of $52 billion, according to CNBC calculations. At the lower end, its valuation would come in below $50 billion.
Only 9.4% of Arm’s shares will be freely traded on the Nasdaq stock exchange in New York, with SoftBank expected to own roughly 90.6% of the company’s outstanding shares after the completion of the IPO.
The underwriters for the listing have an option to purchase up to an additional 7 million American depositary shares, worth $735 million. If they choose to purchase these shares, SoftBank’s ownership of Arm will be reduced to 89.9%, the company said.
Biggest tech IPO of the year
Arm’s listing is set to be the biggest technology IPO of the year. Investors are hoping that the listing could breathe new life into an IPO market that has largely been frozen over since 2022.
An onset of macroeconomic and geopolitical challenges — from Russia’s invasion of Ukraine to central bank interest rate hikes — led to a massive slump in tech valuations last year, which in turn caused technology firms to row back on decisions to list.
Arm sees huge potential revenue opportunity for its technology, which it said in its IPO filing had a total addressable market (TAM) of $202.5 billion in 2022. The firm sees this rising to $246.6 billion by the end of the calendar year ending on Dec. 31, 2025 — representing a compound annual growth rate of 6.8%.
Arm says its energy-efficient processor designs and software platforms are integrated into more than 250 billion chips globally, into products ranging from sensors and smartphones to supercomputers.
The company estimates it commands an approximately 48.9% share of the market for semiconductor design. Other players, such as Intel and AMD, have raced to catch up on designing their own chip architectures, but have struggled so far.
The U.K. government had originally hoped Arm would list on the London Stock Exchange, but the company instead dealt a major blow to Britain’s ambitions to become the leading global tech hub by opting for New York.
The U.S. financial center has a deep institutional investor base and analysts who have a close understanding of the technology sector.
Correction: This story has been amended to reflect the fact that Arm is listing on the Nasdaq stock exchange in New York. A previous version of this story misstated the name of the exchange.
