(BFM Bourse) – The Japanese group Softbank has registered the documents for the IPO of its semiconductor division, whose valuation could amount to between 60 billion and 70 billion dollars.
Seven years after its acquisition by the Japanese conglomerate Solftbank, present in internet access services and telephony, the British Arm will make its return to the stock market. The group specializing in technologies for computer chips will not return to the London Stock Exchange, but to Wall Street.
Softbank has indeed filed with the Securities and Exchange Commission (SEC), the American stock market policeman, the preparatory documents for this IPO which will be in the form of ADS (“American Depositary Share”), financial products which allow investors in the United States to own securities of foreign companies.
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A valuation that would be close to 70 billion dollars?
“The number of ADSs to be offered and the price range for the proposed offering have not yet been determined,” Softbank said in a statement. The timing of the operation is also not known. However, according to Bloomberg, Arm intends to conduct “roadshows”, i.e. meetings with investors, during the first week of September before determining the price of its share the following week. A valuation of 60 billion to 70 billion dollars would be sought, according to the American agency.
In addition, according to the document communicated to the SEC, Softbank bought at least August, prior to the IPO, 25% of the capital of Arm from its subsidiary Vision Fund for 16.1 billion dollars, i.e. a total valuation of $64 billion.
Softbank also did not communicate the amount it hopes to raise through this operation. Bloomberg had previously suggested a range of $8 billion to $10 billion.
Founded in 1990, Arm posted revenue of $2.68 billion in its fiscal year ending March 2023, for profit of $524 million.
The British company estimates that the world has around 30 billion chips equipped with its technologies (at the end of March 2023) and that 70% of the world’s population uses products where its devices are present.
Flight around generative AI
Its entry on Wall Street would give a boost to a sluggish IPO market in the United States and more broadly around the world. This is likely to be the largest IPO by amount raised this year. This operation could also approach fundraising records in the technology sector, such as Meta (16 billion dollars in 2012) or even Alibaba (25 billion in 2014), notes Bloomberg.
This operation would also occur at a time when companies similar to Arm have seen their valuation soar since the beginning of the year, driven by the enthusiasm around generative artificial intelligence, at the heart of ChatGPT. The advent of conversational robots is reflected in an increased demand for computer chips and chip architectures, in particular for the products offered by the American Nvidia, in order to give computing power to servers to develop and train these robots.
Nvidia thus exceeded 1,000 billion dollars in market capitalization in the spring, and has seen its share price rise by more than 220% since the start of the year. Moreover Arm should have been sold to Nvidia last year but Softbank had been forced to change its mind due to regulatory obstacles preventing the transaction from taking place.
The American company Nvidia will publish its quarterly results on Wednesday evening, which will constitute a crucial test to verify that the demand for products related to generative AI is as great as hoped. Similarly, the reaction of investors to these accounts will make it possible to verify that the market’s appetite for these stocks associated with this sector has not faded too much after the sharp rise at the start of the year. C3.ai, one of the small companies that had been won over by the market fever for generative AI (+184% still since January 1) is down 25% since the beginning of August.
Julien Marion – ©2023 BFM Bourse