SoftBank-owned Arm files for IPO in US, could be biggest in nearly 2 years

At $10 billion, the listing could be the largest in the US since electric-vehicle maker Rivian Automotive Inc's $13.7 billion offering in October 2021

SoftBank-owned chip designer Arm Holdings has filed for an initial public offering in the United States of America (USA), and it could be the biggest such listing in 2023, Bloomberg reported on Tuesday. The listing is expected to take place early next month.

At $10 billion, the listing is poised to be the largest in the US since electric-vehicle maker Rivian Automotive Inc's $13.7 billion offering in October 2021.

It could rank near or even just below the tech industry's largest-ever IPOs: Alibaba Group Holding Ltd's $25 billion 2014 offering and 2012's $16 billion debut by Meta Platforms, then known as Facebook Inc.

Masayoshi San-led SoftBank acquired UK-based Arm in 2016 at a valuation of $32 billion. On Monday, when the papers were filed, the company's value was reported at $64 billion.

The listing of Arm's shares will be on the Nasdaq exchange in the US. The IPO is being led by major financial institutions, including Barclays Plc, Goldman Sachs Group Inc, JPMorgan Chase & Co, and Mizuho Financial Group Inc. Notably absent is Morgan Stanley from the list of top-tier underwriters.

According to reports, the IPO size could be smaller than the original target of $8 to $10 billion. Arm's target could be adjusted due to SoftBank's decision to retain more ownership after purchasing Vision Fund's stake.

The Bloomberg report also added that a successful listing of Arm could "spur dozens of companies to pursue — or further delay — their own IPO plans".

This includes companies like online grocery-delivery firm Instacart Inc, marketing and data automation provider Klaviyo and footwear maker Birkenstock.

What is Arm Holdings?

Founded in 1990 in Cambridge, United Kingdom, Arm Holdings designs microprocessors, physical Internet protocol (IP) and related technology and software and sells development tools.

Arm licenses and sells its technology and products to international electronics companies. These companies, in turn, manufacture, market and sell microprocessors, application-specific integrated circuits (ASICs) and application-specific standard processors (ASSPs) based on Arm's technology to systems companies for incorporation into a variety of end products.

Arm also licenses and sells development tools directly to systems companies and provides support services to its licensees, systems companies and other systems designers. Its principal geographic markets are Europe, the United States and Asia Pacific.

A Financial Times (FT) report suggested that Arm's chip design has a near monopoly in the market and is crucial for smartphones. Currently, in smartphone chip designs, Arm alone holds the lion's share of more than 99 per cent. It added that nearly 70 per cent of the world's population is currently using a product with a chip from Arm.

Arm's technology is being used by tech giants like Amazon, Alphabet, AMD, Intel, Nvidia, Qualcomm, and Samsung. Apple's iPhone chips also integrate Arm's technology.