Arm Holdings, the UK-based chip designer, made a triumphant return to the stock market, sparking investor enthusiasm and elevating its market value to over $60 billion (£48.3 billion). Shares of Arm concluded Thursday’s trading at more than $63 each, marking a nearly 25% increase from the $51 per share received during the sale.
This return to the stock market represented the largest initial public offering (IPO) of the year, generating $4.87 billion for its owner, SoftBank Group. The substantial surge in share price has been interpreted as a vote of confidence in Arm Holdings, despite concerns about its exposure to various risks in China.
Arm Holdings is a prominent figure in the British technology sector, specializing in chip design for a wide range of devices, including smartphones and game consoles. The company estimates that approximately 70% of the global population uses products relying on its chips, including the vast majority of smartphones worldwide.
CEO Rene Haas expressed optimism about Arm’s growth prospects, attributing it to increasing investments in artificial intelligence (AI), which drive demand for their products. He emphasized the indispensability of Arm’s technology in AI applications, stating, “You can’t run AI without Arm,” and adding, “We think we’re just at the beginning.”
The company’s return to the stock market was highly anticipated, with significant lobbying efforts to list its shares in the UK. However, in March, Arm decided to move forward with a US listing, a decision influenced by the Nasdaq’s experience in handling large tech firm IPOs, as explained by Mr. Haas. He did leave the door open to potential future listings in London.
Hermann Hauser, who played a role in developing Arm’s first processor, partly attributed the decision to list in the US rather than the UK to the UK’s exit from the European Union. He suggested that Brexit had affected the standing of the London Stock Exchange and hindered the possibility of a dual listing.
SoftBank disclosed the sale of 95.5 million shares at $51 each, while retaining a roughly 90% stake in Arm. This move comes seven years after SoftBank took Arm private in a $32 billion deal. It’s worth noting that a previous plan to sell Arm to US chip giant Nvidia was abandoned in February of the previous year due to significant regulatory challenges in the UK, US, and European Union.
Mr. Haas acknowledged that dealing with political complexities, particularly related to China, presented challenges for Arm but emphasized that this was a common aspect of operating in the tech industry.
