UK chipmaker Arm set to make biggest IPO of the year in US

UK-based chipmaker Arm has applied for a listing on the NASDAQ stock exchange in what could become the biggest US initial public offering (IPO) of the year.

While the filing does not list a price, an internal transaction by SoftBank valued Arm at £50.6 billion ($64 billion). SoftBank is a Japanese investment company that acquired Arm in 2016 for £25.3 billion ($32 billion).

This valuation could make Arm the most lucrative company to have a US IPO since late 2021.

Reuters reports that SoftBank could keep a 90% stake in Arm following the IPO. The investment company was previously said to be planning to sell between £6.3 billion ($8 billion) and £7.9 billion ($10 billion) shares, but may now be less than this amount.

Barclays, Goldman Sachs, JP Morgan and Japan’s Mizuho will oversee the IPO of Arm’s shares, accompanied by 24 banks ready to share in the fees for the deal.

Arm’s Chief Executive Officer, Rene Haas, has also been awarded £15.8 million ($20 million) in stock, and will receive a further £15.8 million ($20 million) in cash on completion of the IPO listing.

This is SoftBank’s second bid to capitalise on its investment. In 2021, they agreed to sell Arm to US chipmaker NVIDIA for £31.6 billion ($40 billion), but the deal fell through last year after UK competition regulators objected.

Arm’s IPO filing

The US filing revealed that 30.6 billion chips with Arm designs were produced in the year until March, an increase from 29.2 billion last year. 

Revenues remained the same at £2.1 billion ($2.7 billion), while net income decreased from £534 million ($676 million) to £414 million ($524 million).

The filing disclosed that Arm generates 25% of its revenues from China. The chipmaker said that its concentration of revenue from China makes it ‘particularly susceptible to economic and political risks’. This could be heightened by the US Government’s attempts to restrict China’s access to advanced chipmaking technology.

Arm said it anticipates a 6.8% annual chip market growth until 2025. Due to the growing complexity of semiconductors needed for smartphones and AI algorithms, the company is expected to contribute more towards the value of each chip.

The UK fails to twist Arm

In March, Rishi Sunak held talks with SoftBank to encourage the investor to list Arm on the London Stock Exchange.

“After engagement with the British government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a US-only listing of Arm in 2023 is the best path forward for the company and its stakeholders,” said Rene Haas.

The UK Government made changes to the UK’s listing rules to get tech companies listed in the country.

“The UK is taking forward ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s leading hub for investment, and the second largest globally,” said a government spokesperson.

Hungry for more tech news?

Sign up for your weekly tech briefings!