ARM Considers Increasing IPO Price Range
September 11 2023 - 6:34AM
IH Market News
Arm Holdings Ltd. is considering raising the price range of its
initial public offering (IPO) after meetings with investors for
what would be the world’s largest listing this year, according to
people familiar with the matter.
Sources, who requested anonymity as the information is private,
said that the sale of shares of the chip designer, owned by
SoftBank Group Corp. (USOTC:SFTBY), is approximately six times
oversubscribed. Deliberations are ongoing, and no final decision
has been made.
Arm (NASDAQ:ARM) initially sought its IPO at a price of $47 to
$51 per share, which would have valued the company at $54.5 billion
at the upper end of the range. This valuation fell short of the $60
billion to $70 billion target the company had aimed for earlier
this year.
It is common for companies going public and their investment
bankers to seek to create positive momentum as they approach the
final pricing of an IPO, scheduled for Wednesday. Trading is set to
commence the following day.
Reuters previously reported that Arm is discussing the
possibility of raising the price range and could set the offer
price at the top of the range or even above it. A representative of
Arm declined to comment.
SoftBank’s shares have risen by as much as 2.6% and have gained
about 15% so far this year.
Arm has been looking to raise up to $4.87 billion by offering
95.5 million American depositary shares in the range of $47 to $51.
Any price increase is a sign of strong demand for its shares during
the roadshow.
During its investor roadshow, Arm stated that it expects revenue
growth of 11% in its current fiscal year and a mid-20% range
increase in fiscal year 2025, driven by demand for chips to power
data centers and artificial intelligence, as previously reported by
Bloomberg.
During a lunch with investors in New York, Arm CEO Rene Haas
reportedly stated that the price increases had provided the company
with “greater uplift than historically seen,” according to
attendees. Investors said Haas expects robust growth to continue in
fiscal year 2026, with tenfold percentage increases in revenue.
The chip giant’s return to the stock market promises to shake up
the market and be the biggest listing of the year.
What you need to know about ARM’s IPO
- According to information from Reuters, SoftBank plans to sell
around 10% of ARM’s shares in the IPO and seeks a valuation of
between US$60 billion and US$70 billion for the company.
- ARM planned to raise between $8 billion and $10 billion from
the IPO, a number that is expected to decrease after SoftBank buys
a 25% stake in the company.
- SoftBank is in talks with several technology companies that are
considering investing in the IPO, including Amazon and Nvidia.
- The exchange listing is expected to provide a boost to the
entire technology market.
- ARM expects to list on the Nasdaq and trade under the symbol
‘ARM’.
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