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  • Writer's pictureMichael Amelio

Arm Plans Nasdaq Listing for Anticipated Largest IPO of the Year

Arm, the British chip manufacturer under the ownership of Japan's SoftBank since 2016, has officially filed for a listing on the Nasdaq stock exchange. This move comes after Arm's announcement five months ago that it had submitted confidential preliminary paperwork for an initial public offering (IPO) with U.S. regulators.

Although Arm's F-1 filing did not disclose an estimated share price, SoftBank recently acquired the remaining 24.99% stake in Arm that it did not already own, valuing Arm at over $64 billion.

This valuation is twice the amount SoftBank paid for Arm seven years ago, which was $32 billion. SoftBank's Vision Fund, which includes limited partners like Saudi Arabia's and Abu Dhabi's sovereign wealth funds, initially acquired a stake in Arm for $8 billion in 2017.

SoftBank has a history of marking up its investments, as seen in its involvement with WeWork. The company invested $4.4 billion in WeWork when it was privately held in 2017, valuing it at $20 billion. Subsequently, SoftBank invested again at a $47 billion valuation in 2019 and eventually lost a substantial portion of its investment in WeWork.

Arm specializes in the development and licensing of high-performance, energy-efficient central processing unit (CPU) products and related technology. These products are crucial for numerous semiconductor companies and original equipment manufacturers (OEMs) worldwide. Prominent clients include Apple, Alphabet, Advanced Micro Devices, Qualcomm, and Mercedes-Benz.

Industry analysts predict that Arm's IPO will be the largest of 2023. However, there is some disparity in opinions regarding Arm's valuation. Bernstein analysts recently assessed Arm's fair-market value to be around $40 billion based on preliminary financial information.

It remains to be seen if this valuation will be adjusted based on the financial details provided in Arm's F-1 filing. The filing revealed that Arm reported a net income of $524 million on revenue of $2.68 billion in its fiscal year 2023, ending in March, which is consistent with its 2022 sales of $2.7 billion.

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