The lead underwriter on the initial public offering (IPO) of Arm Ltd that could value the British chip designing company at as much as $60 billion that SoftBank Group Corp (9984.T) plans to pick is Goldman Sachs Group Inc (GS.N). That was confirmed by three people familiar with the matter.
After the collapse of SoftBank’s deal to sell Arm to Nvidia Corp (NVDA.O) for $40 billion last month as a result of objections from the U.S. and European antitrust regulators, the IPO preparations came up. By March 23, SoftBank was set to list Arm on NASDAQ, as previously stated.
In the last few weeks, investment banks for Arm’s IPO were interviewed by SoftBank, where they were asked to commit to providing a credit line as part of their commitments. The amount Goldman Sachs offered for a credit line could not be revealed.
SoftBank was asking banks for an $8 billion margin loan tied to Arm’s IPO stock, Bloomberg News reported in February. For now, SoftBank may not proceed with the deal and its plans were subject to market conditions, according to the sources, who requested anonymity since these preparations are confidential. Arm, Goldman Sachs and SoftBank declined to comment.
In 2016, SoftBank took Arm, whose technology powers Apple’s iPhone and nearly all other smartphones, private for $32 billion. Softbank has said that amid high demand for chips, Arm’s net sales surged 40% to reach $2 billion in the nine months to December.
Even though this bodes well for the IPO, SoftBank may still not be made whole for the lost Nvidia deal in the near term. This is because Arm became worth more than $80 billion at one point due to a rally in Nvidia’s shares under their cash-and-stock merger agreement.
SoftBank founder Masayoshi Son told investors in February about Arm’s listing:
“We will aim for the biggest IPO ever in semiconductor history.”
Although SoftBank is yet to finalize the venue of the floatation, it is likely to list Arm in the U.S., the sources said. In 2020, SoftBank announced a deal to sell Arm to Nvidia. However, in late 2021, the U.S. Federal Trade Commission sued to block it, arguing that it would be detrimental to competition in the budding markets for chips in a new category of networking chips and self-driving cars.
Regulators in the European Union (EU) and Britain also examined the transaction and had yet to receive approval in China. Arm appointed Rene Haas to replace Simon Segars as chief executive after the deal was canceled. Haas, an industry veteran, joined Arm in 2013 and worked at Nvidia previously for seven years.
Arm licenses its technology and architecture to customers that design chips for devices ranging from mobile phones to computers such as Apple Inc (AAPL.O), Qualcomm Inc (QCOM.O), and Samsung Electronics Co Ltd (005930.KS).