SoftBank Group Corp-owned Arm is close to securing investor support towards a fully-diluted market cap of $54.5 billion it was seeking in its IPO at the top of its $47-51 per share range. Following strong demand, Arm may ask its investors to value the IPO higher, sources told Reuters.
The Arm IPO is set to be the biggest US stock market debut in two years. The final pricing will be released on Wednesday, September 13, and the stock will start trading from Thursday.
Arm is expected to price its IPO near the top or even higher than the $47-51 per share range. Shares of the SoftBank-owned chip designer are nearly six times subscribed, as per sources. The company is valued at $54.5 billion, slightly short of the company's targeted valuation of $60-70 billion earlier this year.
Arm is discussing the possibility of raising the price range and seeking a valuation of more than $54.5 billion, in light of the IPO's oversubscription. Alternatively, it may keep the price range the same and pricing the IPO above it on Wednesday, which would also lead to a valuation higher than $54.5 billion, as per a Reuters report.
Following some key orders from investors on Monday (September 11), a decision on the price range expected to be announced in the next two days. The sources also warned that the trajectory of orders could still change as no anticipated investors' commitments are yet to be finalised.
The owner, SoftBank, intends to retain a 90.6 percent stake in Arm following the IPO, valued at nearly $5 billion, due to which the company will not offer more shares, as per Reuters.
Arm began its marketing efforts last week to gain the confidence of investors that the company would grow beyond the mobile market. For its IPO, the chip designer has already roped in many of its major clients as cornerstone investors, including Apple, Nvidia, Alphabet, Advanced Micro Devices, Intel and Samsung Electronics.
Arm's chip designs are found in nearly all the world’s smartphones, including Apple iPhones and most Android devices. The company’s listing has big implications for SoftBank as well.
SoftBank shares have increased around 15 percent this year so far.
