2023-09-04 06:44:18
Arm, a British semiconductor design company under the SoftBank Group, will start a roadshow (briefing session for institutional investors) for its initial public offering (IPO) this week, but expectations for listing are weakening by facing reality. , with lower prospects for both valuations and funding.
Arm is now looking to raise between $5 billion and $7 billion, down from a previous target of up to $10 billion, Bloomberg News reports. The valuation, previously targeted at $60-70 billion, might be in the $50-60 billion range.
Arm has secured major customers such as Apple, Nvidia, Intel and Samsung Electronics as strategic investors in the IPO. But the stock’s IPO will likely depend on how investors assess a wider range of factors, including China risks, slowing growth in the smartphone market and upside earnings from growing adoption of artificial intelligence (AI).
“We expect $50 billion to $60 billion to be a more realistic target,” Kirk Boudry, an analyst at Astris Advisory, said in a note Monday. It didn’t, as Arm reported declining sales and a higher-than-expected exposure to China.”
arm logo
Photographer: Gabby Jones/Bloomberg
Arm conducts most of its China business through a separate unit, Arm China, according to the prospectus. Arm China is Arm’s largest customer, accounting for almost a quarter of its sales in March. The document also confirms that Arm’s sales fell regarding 1 percent last year to $2.68 billion.
For SoftBank founder Masayoshi Son, the latest valuation estimate will at least hurt. The company bought a 25% stake in Arm from the Vision Fund for $16.1 billion, valuing Arm at regarding $64 billion. Boudley’s estimates range from $12.5 billion to $15 billion in value for the stake.
“The prospectus clearly states that pricing is determined by the terms of existing contracts,” Boudry said, but “it’s impossible to understand pricing if you don’t know what it is.” .
The numbers are still subject to change, as a roadshow is set to go ahead this week ahead of the company’s official listing on the Nasdaq next week. A weaker-than-expected listing might also hurt SoftBank’s credit outlook, Bloomberg Intelligence analyst Sharon Chen said.
Related article:
Arm said it has secured major customers such as Apple, Nvidia, Intel and Samsung Electronics as strategic investors in the IPO.
Source: Bloomberg
news-rsf-original-reference paywall">Original title:Arm IPO Expectations Tempered by Reality as Roadshow Kicks Off(excerpt)
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