Arm files for IPO – and SoftBank will retain control
Japanese owner states float 'won’t have material impact,' suggesting small stake will be up for grabs
Arm has secretly filed for a public listing that its owner, SoftBank, says will see the chip design firm remain a subsidiary.
Arm on Saturday announced "that it has confidentially submitted a draft registration statement on Form F-1 to the US Securities and Exchange Commission relating to the proposed initial public offering of American depositary shares representing its ordinary shares."
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On Monday SoftBank (SBG) also announced the confidential application to list, but added the following important factoid:
SBG intends that Arm will continue to be a consolidated subsidiary of SBG following the completion of the proposed initial public offering. SBG does not expect that any such offering would have a material effect on its consolidated results or financial position.
That wording is confirmation that SoftBank intends to retain a majority holding in Arm even after the listing. Stating that the float won't have a material impact on its results or financial position suggests only a small slice of Arm will be floated.
Arm's Saturday disclosure doesn't indicate the outfit filed on the weekend, as the United States Securities and Exchange Commission allows non-public filings. The disclosure may instead reflect Arm's decision to confirm the accuracy of reports of the float, rather than let speculation run rife.
Prognosticators still, however, have plenty to ponder. Both Arm's and SoftBank's statements added "The size and price range for the proposed offering have yet to be determined. The initial public offering is subject to market and other conditions and the completion of the SEC's review process."
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Reuters reports that the chip design firm will favor the NASDAQ – a bourse that has traditionally been the home of many a tech company.
Wherever Arm lands, its listing will be closely watched for a couple of reasons.
One is that the float is tipped to be one of 2023's biggest.
The other is that SoftBank's recent financials have been far from stellar. Tens of billions of losses have besmirched its bottom line, with only a sale of Alibaba shares adding some respectability, as plenty of the investment house's bets on startups failed to deliver.
When SoftBank scooped Arm for $32 billion in 2016 the acquisition was seen as a bet on growing demand for chips. The strategy looked sound when Nvidia bid $66 billion to acquire Arm before regulators nixed the deal.
Demand for chips has since dipped markedly as the global economy slowed down.
Just what SoftBank can score for whatever portion of Arm it decides to float will therefore be closely watched – both for its contribution to the Japanese firm's finances and an indicator of investor sentiment. ®