NEW YORK (Reuters) – Chip designer ARM Holdings (ARM.O) got a valuation of $54.5 billion in its U.S. initial public offering on Wednesday, seven years after its owner SoftBank Group (9984.T) acquired shares. The company is private for $32 billion.
The IPO represents a decline from the $64 billion valuation at which SoftBank last month acquired the 25% stake it did not already own in the company from the $100 billion Vision Fund it manages.
But even with that low valuation, SoftBank is doing better than its $40 billion deal to sell Arm to Nvidia Corp (NVDA.O), which it abandoned last year amid opposition from antitrust regulators.
Arm priced its initial public offering at $51 per share, the top of a specified range, to raise $4.87 billion for SoftBank based on the sale of 95.5 million shares, the company said on Wednesday. Reuters first reported on Arm’s pricing decision.
Arm shares are scheduled to begin trading in New York on Thursday.
Arm has already signed up several of its major customers as cornerstone investors in its IPO, including Apple (AAPL.O), Nvidia, Alphabet (GOOGL.O), Advanced Micro Devices (AMD.O), Intel (INTC.O), and Samsung Electronics ( 005930.KS).
A smartphone bearing the Arm Ltd logo is placed on a computer motherboard in this illustration taken on March 6, 2023. REUTERS/Dado Rovik/Illustration/File Photo/File Photo Obtaining licensing rights
Reuters was first to report on Tuesday that Arm had received enough support from investors to secure at least the high end of the price range of $47 to $51 per share for its initial public offering (IPO), including the possibility of selling shares at a price higher than that. ranges.
Arm launched its IPO marketing efforts last week, seeking to convince investors that it has growth beyond the mobile phone market, which it dominates with a 99% share.
Weak mobile phone demand during the global economic slowdown led to Arm’s revenues stagnating. Sales totaled $2.68 billion in the 12 months to the end of March, compared to $2.7 billion in the previous period.
Arm told potential investors in New York last Thursday that the cloud computing market, of which it has only 10% and thus more room to expand, is expected to grow at an annual rate of 17% through 2025, partly due to advances in artificial intelligence. . The automobile market, of which it controls 41%, is expected to grow by 16%, compared to an expected growth of only 6% for the mobile phone market.
ARM also told investors that royalties, which account for most of its revenue, have been accumulating since it began collecting them in the early 1990s. Royalty revenue was $1.68 billion in the most recent fiscal year, up from $1.56 billion the year before.
An area of scrutiny for investors has been Arm’s exposure to China, given geopolitical tensions with the United States that have led to a race to secure chip supplies. Sales in China contributed 24.5% of Arm’s revenue of $2.68 billion in fiscal 2023.
(Reporting by Echo Wang and Anirban Sen in New York) Editing by Sandra Maler, Greg Roumeliotis and Richard Zhang
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