UK-based microchip designer Arm has lodged paperwork to list its shares on the US Nasdaq stock market, with the anticipated launch set for September. This move has stirred both intrigue and contention from heavyweights such as Amazon, and even drawn the attention of the UK Prime Minister (PM).
In an announcement on Monday, the firm revealed its public submission of a registration statement outlining a proposed Initial Public Offering (IPO), noting that specifics regarding share count and pricing were still in flux. Nonetheless, experts speculate that this IPO could mark the most substantial listing since late 2021.
At its core, an IPO materializes when a privately held company offers its shares to the public before trading commences. This strategic maneuver empowers the company to amass funds by vending ownership stakes to a diverse array of investors, while also gauging pre-trading interest and ascribing value; purportedly, the company is eying a valuation in the range of $60 to $70 billion.
Recognized for its chip designs utilized by over 500 clients including tech giants Apple, Samsung, and Google, Arm has purportedly engaged in dialogues with Amazon to secure the latter as a foundational investor in the forthcoming IPO. Of particular note is Arm’s influence in Cloud computing—a facet that could particularly captivate Amazon, given that its own Cloud division, Amazon Web Services, leverages Arm’s designs for its proprietary processing chip, Graviton.
This comes as a blow for the UK, as in March, the Cambridge-based company opted against listing shares in London, much to the ire of the UK PM Rishi Sunak, who met with them to persuade them otherwise. The firm said it did not plan to pursue a UK listing, saying the US was “the best path forward”.
Arm was previously listed on both the London and New York stock market for 18 years. Its 2016 purchase by Japanese conglomerate Softbank for $32 billion saw the company become private, with later talks to float it centring around a US-only listing. Other major global technology companies including Google, Apple and Facebook trade on the Nasdaq.
Founded in 1990, Arm has been a coveted company of the UK’s tech sector. Yet the company’s decision raised concerns that the UK market was not doing enough to attract tech company stock offerings. Arm’s Chief Executive Rene Haas has said, however, the company will keep its material intellectual property, headquarters and operations in the UK.
The latest filing shows Softbank is pushing ahead with the multi-billion dollar float despite difficult conditions in the global financial markets. Arm’s sales declined to $2.68 billion in the year ending 31st March, hurt by a slump in global smartphone shipments, but earlier in August, the company bought Vision Fund’s stake in Arm at a reported valuation of $64 billion coinciding with news of the listing and IPO.
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