SoftBank’s Arm Launches IPO To Court T Rowe To Consider Valuation Of $52 Billion

Arm Holdings Ltd, a subsidiary of SoftBank Group, initiated its roadshow for the highly anticipated initial public offering (IPO) on Tuesday. The chip designer is actively seeking to persuade investors that it merits a valuation of up to $52 billion, marking this year's most substantial share offering.

Arm commenced its roadshow in Baltimore, a strategic choice given its status as the headquarters of influential asset manager T Rowe Price. This underscores the pivotal role played by this fund manager in major IPOs.

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T Rowe Price has been an anchor investor in some of the biggest stock market debuts, which includes electric car maker Rivian Automotive Inc, which was valued at $66.5 billion in its IPO in 2021. However, Arm Holdings is the largest IPO since then.

According to sources as quoted by Reuters, Arm met with some potential investors on Tuesday, including Arlington, Virginia-based Sands Capital.

SoftBank is offering 95.5 million American depository shares of Cambridge, these shares are being offered within a price range of $47 to $51 each, with the aim of raising a maximum of $4.87 billion at the highest end of this range.

Arm has publicized that this proposed price range would assign a valuation to the company ranging from $48 billion to $52 billion. Additionally, Arm has indicated that it might consider issuing certain shares as part of employee compensation, potentially pushing its fully diluted valuation to as high as $54.5 billion

The recent valuation of the company established by the Japanese firm represents a decline from the $64 billion valuation set by SoftBank last month. Last month, the Japanese company completed its acquisition of the remaining 25% stake in the company, which it did not previously own, from its $100 billion Vision Fund.

According to a Reuters report, Jamie Mills O'Brien, a portfolio manager at the British fund manager Abrdn, expressed that SoftBank's valuation request in the IPO seemed "more acceptable than originally anticipated."

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"We are watching closely how the company handles the relationship with its China business – alongside any further impacts from the technology ‘war’ between China and the United States," he said.

Arm has signed up many of its major clients as cornerstone investors in its IPO, including Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel and Samsung Electronics.