How to Value SoftBank’s Semiconductor Arm IPO Among the NVidia and AI Frenzy

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    Andrew Koval

    The much-anticipated IPO for SoftBank Group Corp. semiconductor unit Arm was filed Monday. With the AI frenzy Softbank is looking to time the listing
    [See the full post at: How to Value SoftBank’s Semiconductor Arm IPO Among the NVidia and AI Frenzy]


    Arm Holdings announced terms for its IPO on Tuesday.

    The Cambridge, UK-based company plans to raise $4.7 billion by offering 95.5 million ADSs (100% secondary) at a price range of $47 to $51. Certain cornerstone investors, including Intel and NVIDIA, intend to purchase $735 million worth of ADSs in the offering (16% of the deal). At the midpoint of the proposed range, Arm Holdings would command a fully diluted market value of $50.8 billion.

    At $4.7 billion, Arm is slated to be the largest IPO of 2023, and the largest deal since Rivian (RIVN) in late 2021. The offering would raise nearly $1 billion more than the year’s current leader, J&J spin-off Kenvue (KVUE).

    Although the company has not specified an exact date for the IPO, it is widely expected within this month. Bloomberg earlier reported arm management would likely price its shares on September 13, with trading to occur the following day.

    Andrew Koval

    Arm Holdings started trading opened at $56.10, valuing the company at $59.9 billion.

    Arm Holdings sold around 95.5 million shares on the Nasdaq.
    On Wednesday priced at the upper end of its expected range, at $51 per share

    $ARM 61.40+10.40 (+20.39%) As of 12:24PM EDT

    At a $54 billion valuation, Arm’s price-to-earnings multiple would be about 104 based on the most recent fiscal year profit. That’s comparable to Nvidia’s valuation, which trades at 108 times earnings, but without Nvidia’s 170% current-quarter growth forecast.

    In a presentation to investors, Arm said it expects the total market for its chip designs to be worth about $250 billion by 2025, including growth in chip designs for data centers and cars. Arm’s revenue in its fiscal year that ended in March slipped less than 1% from the prior year to $2.68 billion.

    Arm’s critical customers, including Apple, Google, Samsung and TSMC, are expected to buy shares in the offering. That’s a testament to Arm’s influence on the global semiconductor industry.

    In an interview with CNBC on Thursday, SoftBank CEO Masayoshi Son emphasized how Arm technology is used in artificial intelligence chips, seeking to tie the firm to the recent boom in machine learning. He also said the he wanted to keep the company’s remaining Arm stake as long as possible.

    The debut could kick open the market for technology IPOs, which have been paused for nearly two years. It’s the biggest technology offering of the year.

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