British semiconductor company Arm Holdings announced the launch of its IPO roadshow on Tuesday for what it hopes to be the largest IPO of 2023. The Cambridge, United Kingdom-based company plans to raise $4.7 billion through the sale of 95.5 million shares of American depositary shares (ADSs) at a price range of $47 to $51.
At the midpoint of the price range, Arm would have a fully diluted market value of $50.8 billion. It plans to list on the Nasdaq under the symbol ARM, and the offering is expected to price during the week of September 11.
IPO ETF provider Renaissance Capital said the Arm deal could be the one that “finally breaks through the post-2021 tech logjam.”
Wrote Bill Smith, co-founder and CEO of Renaissance Capital, in an email: “Arm’s offering will be an important test of market sentiment, especially for the big tech names that were sidelined by last year’s sell-off. Assuming the deal does well, and returns from the year’s other large issuers hold up, it should spark a pickup through the rest of the year.”
If successful, the deal should also help provide some insight into the valuations of late-stage venture-funded companies, which have clogged the IPO pipeline for the last five quarters.
Large tech deals expected to follow Arm include grocery delivery company Instacart and marketing automation platform provider Klaviyo.
While the United States did see a slight pickup in IPO activity last quarter, with 22 IPOs worth $7.4 billion offered, the market had been relatively stagnant since the first quarter of 2022, with about $2 billion worth of stock (or less) on offer for five straight quarters.
According to Arm, it is a leader in energy-efficient CPUs for smartphones. It booked $2.7 billion in revenue for the 12 months ended June 30, 2023, and has stated it shipped more than 30 billion Arm-based chips in fiscal year 2023.
Arm’s CFO is Jason Child, who joined in November 2022 and has been CFO of Groupon, Jawbone, Opendoor, Splunk, and Coupang.
Some large tech companies, including Nvidia, Intel, Apple, and Samsung Electronics, are cornerstone investors in the deal. They will purchase $735 million worth of the ADSs, or 16% of the shares on offer. Barclays, Goldman Sachs, J.P. Morgan, and Mizuho are acting as joint book-running managers for the proposed IPO
Arm is wholly owned by Softbank, which acquired it for $32 billion in 2016. Before that, Arm was listed dually in London and New York. Softbank will still own about 90% of Arm’s shares after the upcoming IPO.