Chip giant Arm gears up for IPO

Arm sidesteps the UK market and aims to raise between $8bn and $10bn on the New York Stock Exchange, according to reports

UK chip maker Arm Ltd has submitted a draft registration statement to the US Securities and Exchange Commission (SEC) for a US stock listing, signalling its decision to bypass London markets in what will be one of the largest IPOs of the year.

The size and price range of the proposed offering have not yet been confirmed, but reports suggest that the SoftBank Group-owned company aims to raise between $8bn and $10bn.

"The initial public offering is subject to market and other conditions and the completion of the SEC's review process," SoftBank Group (SBG) said in statement.

"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."

Arm sidesteps UK market

In March, the semiconductor manufacturer announced it would list its shares on the New York Stock Exchange, thwarting the British government's hopes to see Arm return to the London stock market.

Prime Minister Rishi Sunak, his predecessor Boris Johnson, and numerous government and London Stock Exchange representatives held talks with SoftBank about a potential dual listing for Arm.

It was also reported in March that the UK's Financial Conduct Authority (FCA) was willing to soften stock exchange rules to secure an Arm listing in London.

Arm was previously listed in London before being acquired by SoftBank for £24.6bn in 2016.

UK market needs more tech companies

Arm's decision to pursue a US listing has raised concerns that the UK market is not doing enough to attract stock offerings from tech companies. US exchanges are viewed as offering higher profiles and valuations compared to London, which could discourage UK-based firms from listing locally.

SoftBank had been searching for options for Arm since the deal to sell the company to US chipmaker Nvidia for $40bn collapsed in 2022.

Arm specialises in designing chips that are integrated into 95 per cent of the world's smartphones. Top chip manufacturers such as the Taiwan Semiconductor Manufacturing Company (TSMC), as well as major brands like Samsung and Apple, use Arm's designs to create their processors.

The microchip industry is widely regarded as one of the most valuable sectors in the tech industry due to its wide-ranging applications. Its uses extend from powering smartphones to enabling infrastructure for national security and supporting advanced technologies like virtual reality, AI and 5G.

Arm's push for a US stock listing coincides with a significant drop in the number of stock market listings since the Russian invasion of Ukraine. In addition, the prices of shares of major tech companies have also taken a hit due to the pandemic.

According to Dealogic, US IPOs, excluding listings for special purpose acquisition companies, have declined by approximately 22 per cent to reach just $2.35bn year-to-date.

The volatility of the stock market and economic uncertainty have deterred many hopefuls from pursuing IPOs.

If Arm's stock market listing is successful, it would be good news for its parent company Softbank. The losses of its Vision Funds have been exacerbated by declining valuations of many of its investments in technology start-ups.

Goldman Sachs Group Inc, JPMorgan Chase & Co, Barclays and Mizuho Financial Group are leading Arm's IPO preparations.