UK chip designer Arm has commenced the process of listing its shares on the Nasdaq exchange in New York, marking one of the most significant flotations in recent times, following the London Stock Exchange’s unsuccessful bid. The move, driven by its owner, Japanese investor SoftBank, culminated with the company registering for share listing late on Monday. This decision comes after months of anticipation in a stock market environment marked by volatility.
The impending listing on Nasdaq marks Arm’s return to the stock markets, concluding seven years of private ownership under SoftBank’s leadership, who orchestrated the privatization of the chip designer in a £24 billion deal in 2016. Recent reports suggest that an internal SoftBank transaction has valued Arm at $64 billion.
Cambridge-based chip designer Arm stands as a rare UK tech champion. Established in 1990, it has been a pivotal player in the mobile computing revolution, with its designs integral to semiconductor chips in devices such as Apple’s iPhones and laptops, Samsung’s phones, and a diverse array of products encompassing electric cars, driverless vehicles, and drones. These designs have been instrumental in powering over 250 billion devices worldwide.
Despite its UK roots, the decision to list in New York follows the British government’s unsuccessful endeavor, led by Rishi Sunak, to encourage Arm and other tech companies to list shares on the London Stock Exchange.
This listing marks SoftBank’s second attempt to capitalize on its investment. In 2021, SoftBank entered an agreement to sell Arm to US chipmaker Nvidia for $40 billion. However, regulatory hurdles in the UK led to the deal’s collapse.
According to the US filing, Arm’s chip designs facilitated the creation of 30.6 billion chips in the year to March, up from 29.2 billion the previous year. While revenues remained steady at $2.7 billion, net income experienced a decline from $676 million to $524 million.
Arm has yet to unveil the number of shares to be offered or the expected valuation, although SoftBank will continue to retain control of the company. Notably, the listing will not generate proceeds for Arm itself.
Anticipating a 6.8% annual growth in the chip market until 2025, Arm foresees its expertise in the complex semiconductors that power smartphones and drive AI algorithms to contribute more significantly to the value of each chip.
The filing also discloses that a quarter of Arm’s revenues originate from China. The company acknowledges that this dependence exposes it to economic and political risks, especially given ongoing efforts by the US government to restrict China’s access to advanced chip-making technology. Arm acknowledges that restrictions imposed by the US, UK, or China could substantially impact its business.
Arm’s CEO, Rene Haas, stands to gain $20 million in stock and an additional $20 million in cash should the listing conclude.
Barclays, Goldman Sachs, JP Morgan, and Japan’s Mizuho will spearhead the initial public offering of Arm’s shares, with another 24 banks poised to share in the fees associated with this major deal.