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$10 Billion IPO for Chip Designer Arm

SoftBank Group Corp. has started testing investor appetite for an initial public offering of British chip designer Arm Ltd., which could raise as much as $10 billion, people with knowledge of the matter said.

finger and thumb holding a small microchip made of black

What is an IPO?

IPO stands for Initial Public Offering. It is the process by which a privately held company offers shares of its stock to the public for the first time, in order to raise capital and become publicly traded.

During an IPO, the company works with investment banks to determine the initial price of the stock and the number of shares to be offered. The shares are then sold to institutional investors, such as mutual funds and pension funds, as well as to individual investors.

Once the IPO is completed, the company's shares are listed on a stock exchange, such as the New York Stock Exchange (NYSE) or the NASDAQ, and can be bought and sold by investors.

Going public through an IPO can provide a company with access to a large pool of capital, as well as increased visibility and prestige. However, the process can be time-consuming and costly, and can also involve increased regulatory and reporting requirements.


The last decade has seen a number of successful IPOs (Initial Public Offerings) across various industries. Here are some notable examples:

  1. Alibaba Group Holding Ltd. - The Chinese e-commerce giant went public in 2014, raising $25 billion in the largest IPO in history at the time.

  2. Facebook, Inc. - The social media giant went public in 2012, raising $16 billion and achieving a market capitalization of $104 billion on its first day of trading.

  3. Uber Technologies Inc. - The ride-hailing company went public in 2019, raising $8.1 billion in one of the largest tech IPOs in history.

  4. Zoom Video Communications, Inc. - The video conferencing company went public in 2019, raising $751 million and achieving a market capitalization of $16.7 billion on its first day of trading.

  5. Airbnb, Inc. - The online vacation rental marketplace went public in 2020, raising $3.7 billion and achieving a market capitalization of $100 billion on its first day of trading.

These are just a few examples of successful IPOs over the last decade. Of course, there have been many others, and the success of an IPO can vary based on a variety of factors, including market conditions, the company's financial performance, and investor sentiment.


Is the timing right for Arm Ltd & Why SoftBank?

The Japanese conglomerate may launch the share sale in New York as soon as September, said the people, who asked not to be identified discussing private information. The IPO is on course to be the largest globally this year, data compiled by Bloomberg show.


SoftBank Group Corp is a Japanese multinational conglomerate holding company headquartered in Tokyo, Japan. It was founded in 1981 by Masayoshi Son and has since grown into one of the largest technology investment companies in the world.

SoftBank Group has a diverse portfolio of investments in technology, telecommunications, e-commerce, finance, and other industries. Some of its most notable investments include Alibaba Group, Uber, ARM Holdings, Boston Dynamics, and WeWork.

In addition to its investment activities, SoftBank Group also operates a number of subsidiaries, including SoftBank Corp., a major Japanese telecommunications company, and SoftBank Vision Fund, a venture capital fund that has invested in some of the most high-profile technology start-ups in recent years.


Ideal company to pitch this IPO?

Overall, SoftBank Group has a reputation for being a major player in the global technology industry and a driving force behind many of the most innovative and disruptive companies of our time.


Who is Chip Designer Arm?

Arm is a leading technology company that designs and licenses semiconductor intellectual property (IP), including processors, graphics processing units (GPUs), and other system-on-chip (SoC) components. The company was founded in 1990 as Advanced RISC Machines (ARM) and is headquartered in Cambridge, England.


Arm's chip designs are used in a wide range of electronic devices, including smartphones, tablets, laptops, smart home devices, and servers. Some of Arm's notable chip designs include the Cortex-A series of application processors, the Mali series of GPUs, and the Neoverse series of server CPUs.

Arm's chip designs are licensed to a variety of semiconductor companies, including Apple, Samsung, Qualcomm, and NVIDIA, who then integrate Arm's designs into their own chips. This licensing model has made Arm a dominant player in the semiconductor industry, with its technology powering billions of devices worldwide. In 2020, Arm was acquired by NVIDIA in a deal valued at $40 billion.


IPO.

Arm last month confidentially filed for a US listing. Goldman Sachs Group Inc., JPMorgan Chase & Co., Barclays Plc and Mizuho Financial Group Inc. were named as IPO banks in the filing, according to the people. A left lead bank hasn’t been identified yet, they said. More banks are expected to be added to the line up.

Deliberations are ongoing and final decisions on the size and timing of the IPO will be taken subject to conditions in the stock markets, the people said. Representatives for Arm, Goldman Sachs, JPMorgan, Mizuho and SoftBank declined to comment, while a spokesperson for Barclays didn’t immediately provide comment.

SoftBank’s founder Masayoshi Son has said he hopes the Arm IPO can be the largest ever by a chip company. Bankers have pitched a valuation of $30 billion to $70 billion for Arm, a wide range that reflects the challenges of valuing the Cambridge, England-based firm against a backdrop of volatile semiconductor equity prices.


Arm’s net sales rose 28% to 92.8 billion yen ($688 million) in the fourth fiscal quarter, compared with a year earlier. It lost 6.2 billion yen in the quarter though after making 10.1 billion yen a year earlier.


Investing in an IPO (Initial Public Offering) can be a great way to get in on the ground floor of a promising new company, but it can also be risky. Here are the general steps to invest in an IPO:

  1. Research the company: Before you invest in an IPO, do your due diligence and research the company. Look at the company's financials, business model, market position, management team, and any risks associated with the company.

  2. Check the IPO prospectus: The IPO prospectus is a legal document that provides details about the company, its financials, and the offering. It's important to read the prospectus carefully before investing.

  3. Open a brokerage account: You'll need a brokerage account to invest in an IPO. If you don't have one, you can open one with a broker that participates in the IPO.


email kyri@chumpprofit.com if you do not have a broker to invest in this opportunity.

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