Apple and Samsung among Big Tech firms to invest in IPO of SoftBank's UK chip unit

Arm's listing expected to give UK-based company market capitalisation of $60bn

SoftBank owns 75 per cent of Arm's shares, with the remaining 25 per cent held by the SoftBank Vision Fund, which plans to sell up to 15 per cent of its shares. Reuters
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Apple and Samsung are among big-ticket technology companies that are expected to invest in a September initial public offering of SoftBank Group's British chip unit Arm, which is projected to be the biggest of the year.

The world's biggest mobile phone manufacturers will be joined by computer majors Intel and Nvidia at the IPO next month, which will be listed on the Nasdaq Composite in New York and would give Arm a market capitalisation of more than $60 billion, the Nikkei reported on Tuesday.

Tokyo-based SoftBank, one of Japan's biggest investment companies, will be applying for the listing at the US Securities and Exchange Commission later this month and will await approval from the Nasdaq, it said.

SoftBank owns 75 per cent of Arm's shares, with the remaining 25 per cent held by the SoftBank Vision Fund, which plans to sell 10 per cent to 15 per cent of Arm shares, the report said. The Vision Fund is SoftBank's unit that invests in technology companies worldwide.

Cambridge-based Arm intends to sell "stakes of a few per cent each" to big chipmakers to make them medium to long-term shareholders, a move meant to "stabilise the stock price at the time of the listing", the Nikkei said.

SoftBank and Arm did not comment on the report.

Arm's IPO would be the biggest in a year after France's Technicolor Creative Studios listed on the Euronext exchange last September for $97 billion, Nikkei said citing Refinitiv. It would also help boost technology stocks and maintain the strength of the global IPO market.

Plans for an Arm IPO first surfaced in March when Reuters reported that the company was planning to raise $8 billion later this year. At that time, Arm's market capitalisation was projected to hit $50 billion after the IPO. Goldman Sachs, JPMorgan Chase, Barclays and Mizuho Financial Group were reportedly the lead underwriters.

In late April, the UK chipmaker submitted a draft registration document to US authorities in preparation for the stock market flotation – which also ended the London Stock Exchange's hopes of hosting the big IPO. SoftBank had paused talks for a potential London IPO in July 2022 amid the UK's political drama.

Masayoshi Son, the chairman and chief executive of SoftBank, envisioned Arm to achieve the biggest-ever flotation in the semiconductor industry, with an expected valuation range of between $30 billion and $70 billion.

SoftBank had previously tried to take Arm public. It also tried to sell it: in 2020, SoftBank agreed to a $40 billion buyout from Nvidia, but the deal fell through after opposition from regulators.

Arm was founded in 1990 as Advanced RISC Machines, from which its current name was derived. It manufactures chips based on Arm architecture, which power the most widely used consumer electronics devices, most notably smartphones, tablets, computers and wearables.

Among the advantages of using Arm-based chips include low-power consumption, faster performance, power efficiency and cost effectiveness to manufacture. Their small size and scalability enable them to be used in a wide variety of devices, from wearables to servers.

More than 250 billion chips made by the company are embedded in devices globally, and about 70 per cent of the world's population use Arm-based technology across all markets, according to its website. Mr Son in June said he projects this figure to hit one trillion.

Arm's sales in its fiscal year 2022 surged 70 per cent to $2.8 billion compared to fiscal 2016 when SoftBank bought the company for £24.3 billion (about $31 billion at the time). Among its biggest competitors are AMD, IBM, Intel, Nvidia, Qualcomm and Samsung.

Updated: August 08, 2023, 3:18 PM