With the economic climate heading towards recession in most parts of the world, the global IPO market has seen an expected lull as well. Not many big listings have taken place, and even the ones that have, have seen muted response. Add to that the massive fall in valuations and sell-off in tech stocks, companies are now eyeing at increasing profitability over growth at any cost. A year later, we find that numerous high-profile companies and firms have divested much of their workforce in their bids to crack down on expenses.
But the IPO market could soon see its first, big tech listing in a long time. Softbank-owned British chipmaker Arm is eyeing an $8Bn US IPO, one of the largest in a decade, valuing the company between $30Bn and $70Bn. Softbank had acquired Arm for $32Bn in 2016.
According to a Reuters report, the British chip designer is expected to submit the paperwork for its initial public offering sometime in late April, while the actual listing itself is expected to take place later in 2023 in the US. The report cited people familiar with the matter, adding that market conditions will determine the final timing of the listing. Arm aims to raise at least $8 billion in the IPO.
For the US IPO, SoftBank has selected four investment banks – Goldman Sachs Group Inc, JPMorgan Chase & Co, Barclays, and Mizuho Financial Group – who are expected to be the lead underwriters for the deal.
The preparations for what Arm (and SoftBank) hope to be a blockbuster listing in the US are expected to be initiated in the coming days. The chip designer is hoping to be valued at an excess of $50 billion during its share sale. If the deal is not scraped and the IPO goes through, it will make the listing one of the largest IPOs in the US in the last decade. SoftBank acquired Arm seven years ago for $32 billion in what was one of the largest tech deals of the year. Arm, which licenses its intellectual property to chip manufacturers, has evolved into a key player in the global semiconductor industry, and today, its technology is used in products ranging from smartphones to self-driving cars, and its clients include some of the world’s largest tech companies.
This development comes a few days after the SoftBank-owned chip designer rebuffed London by deciding against listing shares on the London Stock Exchange (LSE). Instead, the company dashed the hopes of the British government by focusing on a sole listing on the US stock market.
“After engagement with the British government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a U.S.-only listing of Arm in 2023 is the best path forward for the company and its stakeholders,” Arm CEO Rene Haas had remarked in a meeting with British PM Rishi Sunak and SoftBank founder Masayoshi Son last month.