This market entry promises to be one of the most important in recent years in the technology sector. The British champion of microprocessors Arm, a subsidiary of the Japanese SoftBank, is aiming for a valuation of up to 52 billion dollars for its IPO, down slightly from forecasts.
According to documents published Tuesday on the site of the policeman of the American Stock Exchange (SEC), Arm hopes to raise between 4.5 and 5.2 billion dollars on this occasion. The company, a world reference in the architecture of semiconductors then manufactured under license for almost the entire global smartphone market, announced its intention to go public at the end of August, favoring New York over London.
More than 60 billion dollars expected
This rating is watched with attention by the financial markets in a context of scarcity of transactions in recent months, particularly under the influence of increases in interest rates. The number of introductions in the world has thus fallen by more than 60% in 2022 over one year, for amounts falling by 45%.
Under these conditions, Arm’s listing would be one of the largest in the technology sector since that of Alibaba on Wall Street in 2014, which had then raised $ 25 billion.
The valuation target announced Tuesday by Arm is however lower than the more than 60 billion dollars initially hoped for by its parent company SoftBank Group. The Japanese group has indeed recently paid some 16 billion dollars to take over the 25% of Arm which was previously held by its Vision Fund unit.
Softbank is expected to retain around 90.6% of the securities
In detail, Arm intends to list on the Nasdaq electronic stock exchange – with a strong technological component – at least 95.5 million shares, at a price between 47 and 51 dollars. In the event of strong demand, the number of titles could reach 102.5 million.
Softbank will remain the majority shareholder and is expected to retain around 90.6% of the shares. This share will fall to 89.9% if demand is strong and the number of listed securities increased to 102.5 million.
Many tech giants such as Nvidia, Apple, Samsung Electronics and Intel and Google have expressed interest in investing in Arm at the time of its listing, for a cumulative amount of 735 million dollars, according to the document filed Tuesday with of the SEC.
“It’s much more difficult for Arm to capitalize on the current development in AI than a company like Nvidia because around 60-70% of its business comes from mobile whereas AI is centered on cloud operations,” commented Third Bridge analyst Albie Amankona.
“Our experts are skeptical about the long-term sustainability of top line growth and high margins,” he added, expecting 5-10% business growth in the next five years. next few years, before a decline, and at margins trimmed by a third within five years.
Nearly 6,000 employees in Europe
Arm intends to keep its head office in Cambridge, UK, and could consider a second listing, on the London Stock Exchange, where it was listed until its takeover by Softbank in 2016. Founded in 1990, the British company employed nearly 6,000 employees at the end of March in Europe, Asia and the United States.
Its revenue for its staggered fiscal year ended at the end of March 2023 was stable at $2.68 billion and its net income fell to $524 million from $676 million a year earlier.
Its processors have “provided advanced computing to more than 99% of smartphones in the world” in 2022, she says, estimating that “about 70% of the world’s population uses products” based on its technology.
SoftBank Group, the Japanese investment giant, has experienced many difficulties in its orientations in recent years, such as with the American giant of shared offices WeWork.