Submission of S-1 Registration Statement to U.S. Securities Authorities
British ARM, a subsidiary of Japan's SoftBank, which is set to be listed on the New York Stock Exchange next month, has formalized its Nasdaq listing process by submitting registration documents to the U.S. securities authorities.
On the 21st (local time), ARM submitted a securities registration statement for its initial public offering (IPO) to the U.S. Securities and Exchange Commission (SEC), according to major foreign media including Bloomberg. ARM filed the registration statement under Form S-1 for the listing of Class A common shares. The stock ticker is planned to be 'ARM', but the size of the new share issuance and the offering price have not yet been decided.
According to the documents ARM submitted to the SEC on the same day, ARM aims to raise $8 billion to $10 billion (approximately 10.73 trillion to 13.41 trillion KRW). If the IPO succeeds, ARM's corporate value is expected to reach up to $70 billion (about 94 trillion KRW). Considering the schedule for investor presentations and the determination of the offering price for institutional investors, trading on Nasdaq is expected to begin around next month.
If this IPO is successful, it is expected to be the largest in the U.S. stock market this year. Bloomberg reported that in terms of listing size, it will be the third-largest tech company IPO in U.S. stock market history, following Alibaba's $25 billion IPO in 2014 and Meta's $16 billion IPO in 2012. Bloomberg also predicted that "this listing will be similar to or slightly smaller than the $13.7 billion offering size of electric vehicle manufacturer Rivian, which went public in October 2021." At that time, Rivian raised $13.7 billion through its IPO.
To ensure a successful IPO, it is important to dispel concerns about worsening business conditions such as excess smartphone inventory. The artificial intelligence (AI) boom, the hottest theme in the New York stock market this year, is considered a factor that will boost the listing's popularity. The price-to-earnings ratios (PER) of comparable companies, which serve as a basis for ARM's valuation, are very high: Nvidia (44.8x), Cadence (40.6x), Synopsys (35.3x), and AMD (29.6x).
The ARM listing process is being led directly by SoftBank Chairman Masayoshi Son. It is reported that Chairman Son is personally involved in attracting Nvidia as an anchor investor to promote AI as a key factor for ARM's listing success.
Headquartered in Cambridge, UK, ARM holds core technologies in semiconductor design that serve as the ‘brain’ of IT devices such as PC central processing units (CPUs) and smartphone application processors (APs). About 260 companies, including Amazon, Alphabet, Qualcomm, and AMD, use ARM chips.
SoftBank acquired ARM in 2016 for $32 billion. Initially, SoftBank planned to sell ARM to Nvidia for up to $40 billion in 2020, but the deal was canceled due to opposition from regulatory authorities in various countries. Instead of selling, SoftBank shifted its strategy to list ARM on the U.S. stock market to recover funds.
Currently, SoftBank is reportedly negotiating to reacquire a 25% stake that it sold to Vision Fund 1 ahead of ARM's IPO.
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