Arm Holdings, a British chip development company controlled by SoftBank, held the largest IPO in the United States market this year. The British company had its shares priced at US$51, resulting in a market value of US$54.5 billion.
What is an IPO and why is it important?
IPO is an abbreviation that refers to the English expression “Initial Public Offering”, which translates as “initial public offering”. In summary, this acronym represents a procedure in the financial scenario in which a company becomes a publicly traded entity, with its shares available for trading on the Stock Exchange.
When carrying out an IPO, the company’s shares will be made available for trading, which means that the company will be offering the market the opportunity for investors to acquire fractions of its ownership and participate in the profits distributed.
In this context, the company is no longer under the ownership of a restricted group and now has anonymous shareholders, who can be located all over the world, and who have the ability to negotiate their shareholdings on the Stock Exchange. Therefore, the company is now classified as a publicly traded corporation.
How was the biggest IPO of the year achieved?
Arm is a chip design company that works closely with several semiconductor manufacturers, including those that produce processors used in smartphones and other devices.
In contrast to Nvidia, the British company does not involve itself in the physical manufacturing of the chips, but rather provides the designs and architectures to its customers, who then manufacture the chips based on Arm’s specifications. This approach allows Arm to focus on chip design development and innovation, while its customers are responsible for the physical production of the components.
The values reached on the stock exchange represent a valuation lower than the US$64 billion estimated by SoftBank last month, when it acquired the 25% of Arm that previously belonged to the Vision Fund.
According to Reuters, closing purchase orders before the IPO is not a rare occurrence in public offerings with high demand. However, in the current situation, where listed companies face challenges in attracting investors, the interest shown in Arm bonds signals that the market may be warming up.
After the IPO, the market value is now higher than the US$40 billion that had been stipulated in the agreement to sell Arm to Nvidia in 2022, a deal blocked by antitrust bodies. SoftBank acquired Arm in 2016 for $32 billion. The group will maintain control of around 90% of the company’s shares. Trading in the company’s shares is expected to begin on Thursday.
Some of the company’s key clients have agreed to participate in investing in the company’s initial public offering. Among them are Apple, Nvidia, Alphabet, which owns Google, and Advanced Micro Devices, as reported by Reuters. The company has gained enough support from investors to set a share price ranging between $47 and $51.
Next steps
As controller, the IPO will result in an amount of approximately US$4.9 billion for SoftBank, which holds 9.4% of the company’s shares.
According to the Financial Times, the CEO and founder of the Japanese investment bank, Masayoshi Son, recently expressed his intention to concentrate his investments in areas related to artificial intelligence (AI). A potential strategic partnership with OpenAI could pave the way for innovative collaboration and advancement in AI technologies. At the same time, the company behind ChatGPT, with the support of SoftBank, could accelerate its research and development efforts, generating even more advanced AI models and applications.
Additionally, according to the British newspaper, the Japanese conglomerate is also considering a preliminary approach to acquiring Graphcore, a UK-based AI chipmaker that specializes in creating powerful processing units designed for computing workloads. AI. This suggests that SoftBank is looking for strategic opportunities to strengthen its presence and invest further in the artificial intelligence and related technology sector.
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