Bloomberg News reports that SoftBank Group Corp’s Arm Holdings Ltd has taken a step towards what is to become the biggest IPO or initial public holding in the United States in 2023. It is a bet whether or not the phone chip designer will be able to flourish amidst an era of computing with the help of artificial intelligence.
More about the IPO
In a regulatory filing on Monday, Arm said that Goldman Sachs Group Inc., Barclays Plc, Mizuho Financial Group Inc., and JP Morgan Chase & Co are leading the IPO. The document in which the IPO is recorded also contains 24 more underwriters just beneath the top tier. However, notably, Morgan Stanley was not present.
What would be the outcome for Arm?
Following a successful debut, Arm would provide a windfall for Masayoshi Son, the founder of SoftBank. Last year, his Vision Fund had lost a record $30 billion. This could also lead to a delay for several other startups in either pursuing or delaying their initial public offering plans. Such companies are the ones that are engaged in businesses like online grocery delivery like Instacart Inc and Klaviyo, which is a marketing and data automation provider.
The Road Show
The arm plans to start the roadshow in the first week of September. Following the roadshow, it will price the initial public offering the following week. Bloomberg News reported the same. However, Arm did not divulge the proposed terms for the share sale. However, it is anticipated to seek a valuation between $60 billion and $70 billion.
While Arm aims to raise $8 billion to $10 billion in the IPO, the target figure could be lower. SoftBank is deciding to hold on to more of the firm after buying a stake in Vision Fund. As per the filing, this transaction has valued Arm at more than $64 billion.
The largest IPO since 2014 Alibaba
The initial public offering promises to boost the IPO market, which has been struggling for the last two years. The listing will be the largest in the US since Rivian Automotive Inc, the electric vehicle maker’s $13.7 billion offering of October 2021. Alibaba Group Holding Ltd’s $25 billion 2014 offering aid from Meta Platforms Inc’s 2012’s $16 billion debut.
SoftBank will continue its control as the major shareholder of Arm once trading begins, as per the filing. SoftBank was substantially acquiring 25% stake of Vision Fund in Arm for as much as $16.1 billion.
What did the paperwork confirm?
The paperwork confirmed that Arm anticipated its revenue plunging by 1% in the past fiscal year. The sale of the company dropped $2.68 billion for the period that ended March 31st, as per the document. However, it is still subject to changes.
