SoftBank’s arm was valued at $54.5 billion in the biggest IPO of the year

NEW YORK, Sept 13 (Reuters) – Chip designer Arm Holdings Plc ( ARM.O ) raised a $54.5 billion valuation in its U.S. initial public offering (IPO) on Wednesday, seven years after taking over its owner SoftBank Group Corp ( 9984.T ). The company is $32 billion.

The IPO represents an up-and-down from the $64 billion valuation that SoftBank last month bought from the $100 billion Vision Fund it manages for a 25% stake in the company it didn’t already own.

Yet even at this low valuation, SoftBank is better off than its $40 billion deal to sell the weapon to Nvidia Corp ( NVDA.O ), which it abandoned last year amid opposition from antitrust regulators.

Arm priced its IPO at $51 a share, above its indicated range, raising $4.87 billion for SoftBank based on the sale of 95.5 million shares, the company said Wednesday. Arm’s decision on pricing was first reported by Reuters.

Arm shares are set to open for trading in New York on Thursday.

Arm has already signed up as capital investors in its IPO, including Apple ( AAPL.O ), Nvidia, Alphabet ( GOOGL.O ), Advanced Micro Devices ( AMD.O ), Intel ( INTC.O ) and others. Samsung Electronics (005930.KS).

Reuters first reported on Tuesday that Arm had received enough support from investors for its initial public offering (IPO) to hit the high end of a price range of $47 to $51 per share. commodity.

Arm launched its IPO marketing efforts last week in an effort to convince investors beyond the mobile phone market, which it dominates with a 99% share.

Weak mobile demand during the global recession has caused the arm’s revenue to stagnate. Total sales in the 12 months to the end of March were $2.68 billion, up from $2.7 billion in the prior period.

At a meeting with potential investors in New York last Thursday, the cloud computing market has only a 10% share, so there’s plenty of room for expansion, which is expected to grow at an annual rate of 17% through 2025. Artificial intelligence. The automotive market, which accounts for 41% of it, is projected to expand by 16%, compared to an expected 6% growth in the mobile market.

Arm also told investors that royalty payments, which make up the bulk of its revenue, have been piling up since it began collecting them in the early 1990s. Royalty revenue came in at $1.68 billion in the latest fiscal year, up from $1.56 billion a year earlier.

As geopolitical tensions with the U.S. have led to a race to secure chip supplies, an area of ​​scrutiny for investors is arming China. China sales contributed 24.5% of Arm’s revenue of $2.68 billion in fiscal 2023.

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