The UK-based chip designer Arm Holdings , made a triumphant return to the stock market, with investors eagerly buying its shares and propelling its market value to over $60 billion (£48.3 billion).
The share price surged to more than $63 each by the end of Thursday’s trading, a nearly 25% increase from the $51 per share that Arm received during the sale. This initial public offering (IPO) was the largest of the year and raised $4.87 billion for its owner, Softbank Group.
The significant rise in share price is being interpreted as a strong vote of confidence in the company. Despite concerns about Arm’s exposure to various risks in China, investor enthusiasm remains unwavering, according to Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown.
UK-based chip designer Arm, a significant contributor to the British technology industry, designs chips utilized in various devices, including smartphones and gaming consoles. The company estimates that approximately 70% of the global population relies on products powered by its chips, with nearly all smartphones around the world featuring Arm technology.
CEO Rene Haas
CEO Rene Haas expressed optimism about the company’s growth prospects, citing the increasing demand for its products driven by investments in artificial intelligence (AI). Haas emphasized Arm’s pivotal role in AI, stating, “You can’t run AI without Arm,” and added that the company believes they are just scratching the surface of their potential.
The highly anticipated return of Arm to the stock market saw significant lobbying efforts for the company to list its shares in the UK.However, in March, Arm announced its decision to move forward with a US listing, dealing a blow to the London stock market.
Haas, based in the US, explained that Arm chose the Nasdaq for its IPO due to the exchange’s experience in handling large share sales by tech firms. He also indicated that Arm remains open to the possibility of listing in London in the future.
Hermann Hauser, who played a role in the development of Arm’s first processor, pointed to the UK’s Brexit decision as a factor contributing to the company’s choice to list in the US rather than the UK. He suggested that the London Stock Exchange’s diminished standing was a significant consideration.
Softbank reported selling 95.5 million shares at $51 each, retaining approximately a 90% stake in Arm. Softbank had taken Arm private seven years ago in a $32 billion deal.
Arm had previously agreed to sell itself to the US chip giant Nvidia, but the plan fell through in February of the previous year due to substantial regulatory challenges in the UK, US, and European Union.
CEO Haas acknowledged that navigating political complexities related to China was a challenge but noted that Arm faced similar issues to other tech companies in this regard.