Initial public offering
Preparations
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Hours after Nvidia's proposed acquisition of Arm fell through on 7 February 2022, SoftBank Group CEO Masayoshi Son pitched an initial public offering in spite of a downturn in technology stocks as a result of Federal Reserve restrictions and Chinese regulations affecting companies in SoftBank's portfolio such as Alibaba Group. According to Son, SoftBank would complete the initial public offering within its fiscal year and would likely be listed on the technology-focused Nasdaq for Arm's clientele, much of whom are based in Silicon Valley.[3] The proposed initial public offering signalled that SoftBank would accept a valuation below the US$32 billion it paid for Arm in 2016;[4] early projections from analysts suggested a valuation between US$25 to US$35 billion, less lucrative for SoftBank as the Nvidia deal.[5] Several days afterwards, details emerged of a lawsuit filed by Arm China CEO Allen Wu who sought autonomy over the company, affecting the potential initial public offering. Due to the dispute, Arm could not initially confirm Arm China's revenues.[6] Wu stated his intention to pursue a separate initial public offering in 2025 in an interview with the South China Morning Post.[7] In April 2022, Arm China's board unanimously voted to remove Wu.[8]
On 16 February 2022, Bloomberg News reported that SoftBank was seeking a US$8 billion margin loan—a tactic used heavily by Son—with an external valuation upwards of US$50 billion.[9] On 24 March, Bloomberg reported that SoftBank was officially seeking a valuation of US$60 billion appointed Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group to lead a loan transaction worth as much as US$10 billion.[10][11] Reuters followed up Bloomberg's reporting by stating that Goldman Sachs would lead the transaction altogether.[12] Goldman Sachs was originally hired by SoftBank in 2020 to determine possible options for Arm, including an initial public offering, leading to Nvidia's proposed acquisition.[13] South Korean memory semiconductor supplier SK Hynix expressed interest in acquiring Arm that month in an interview with The Korea Herald, but reserved that it was a "theoretical review" to the South China Morning Post.[14] By 4 April, eight other lenders became involved, including Barclays, Banco Santander, BNP Paribas, and Crédit Agricole.[15] SoftBank would retain its controlling stake in the company after the initial public offering.[16]
In June 2022, Qualcomm CEO Cristiano Amon told the Financial Times that Qualcomm was considering buying a stake in Arm.[17] Then-British prime minister Boris Johnson attempted to convince SoftBank executives to list Arm in the United Kingdom beginning in May;[18] the following month, SoftBank considered listing arm on the London Stock Exchange in addition to the Nasdaq. The secondary listing would prevent Arm from being relisted on the FTSE 100 Index, of which Arm was the index's largest technology company until SoftBank's acquisition.[19] The British government internally debated using the National Security and Investment Act 2021 to pressure Arm to move its initial public offering to London. Arm's refusal to move back created a domestic political issue.[20] The London Stock Exchange has also lobbied for Arm to be listed on its exchange.[21] By June, the dispute with Wu was resolved.[22] Amid a government crisis in July that resulted in the resignation of dozens of government officials, including Johnson, SoftBank halted its work on an initial public offering.[23]
Arm delayed its initial public offering indefinitely in November 2022 citing global market turmoil, telling The Register that the company is "fully committed" to going public in 2023.[24] In December, British prime minister Rishi Sunak met with Haas at 10 Downing Street, reviving talks with SoftBank.[25] British efforts have focused on a dual primary listing, benefiting London's post-Brexit economy and liquidity in Arm's shares. PrimaryBid estimated £3 billion in demand from ordinary investors and proposed a retail offer.[26] By March, Arm decided against a listing in the United Kingdom but reserved that a secondary listing could occur at a later date.[27] Valued at US$30 to US$70 billion,[28] SoftBank aimed to raise US$8 billion that month, led by Goldman Sachs, JPMorgan Chase, Barclays, and Mizuho Financial Group.[29]
Filing and roadshow
On 29 April 2023, Arm confidentially submitted a draft registration statement to the Securities and Exchange Commission (SEC), officially registering for an initial public offering.[30] The filing rose SoftBank Group shares.[31] On 21 August, Arm filed for an initial public offering, notably excluding Morgan Stanley among the involved banks.[32] At a potential debut of US$10 billion, the initial public offering would be the year's largest and the technology sector's third largest, behind Facebook's initial public offering in 2012 for US$16 billion and Alibaba Groups's initial public offering in 2014 for US$25 billion. In preparation for the filing, SoftBank purchased SoftBank Vision Fund's quarter stake in Arm for US$16.1 billion, valuing the company at US$64.4 billion,[33] though SoftBank targeted a valuation of US$52 billion, selling one-tenth of the shares outstanding between US$47 and US$51.[34] Arm began its roadshow on 3 September.[35] On 13 September, The Wall Street Journal reported that Arm would begin trading the following day at US$51 a share, valuing the company at US$54.5 billion; The Wall Street Journal previously reported that the company would initially trade at US$52 at a valuation of US$55.5 billion.[36]