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Thursday, December 7, 2023

UK chip designer Arm valued at $51 a share ahead of Wall Street IPO | Arm

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The British chip designer Arm has secured a $54.5bn (£43.6bn) valuation in its initial public offering (IPO), before its highly anticipated return to the stock market in New York on Thursday.

The company, owned privately by the Japanese investor SoftBank since 2016, priced its shares at $51 each and sold 95.5m shares, raising $4.87bn for Softbank.

The IPO is the biggest Wall Street has seen since the electric carmaker Rivian Automative’s market debut in 2021, and is the biggest IPO of the year.

Earlier this month, the the Cambridge-based tech firm lowered its targeted valuation before the float.

According to Reuters, Arm was targeting a valuation between $50bn and $55bn, down from the $64bn valuation given by its owner, Softbank, in a transaction last month.

Arm Holdings, dubbed Britain’s most successful tech company, has more than 500 clients including Samsung, Google and Apple who use its chip designs across products ranging from iPads and mobile phones to cars and smart TVs.

Earlier this year, Arm announced it would only list in the US, despite British prime minister Rishi Sunak’s ambitions to make London the first choice for tech flotations.

The chip designer predicts on its website that 70% of the world’s population use Arm-based technology. Without its designs, the iPhone and other smartphones would not work. The global chip powerhouse employs more than 5,000 people.

Arm’s valuation is exceedingly high for a chip company when compared with other firms in its market, other than the semiconductor-maker Nvidia, which is worth more than $1tn.

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Many analysts suggested Arm’s elevated share price was partly due to the benefits the sector expected to enjoy from the hype around artificial intelligence (AI), which requires ever-more powerful chips to process the necessary computations.

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