Largest IPO in two years makes début
Shares of UK chip designer Arm Holdings rose 10 per cent in their stock market début, in what is the largest initial public offering of shares in nearly two years.
The shares opened at US$56.10 on the Nasdaq Thursday after having been priced at US$51. The offering price gave Arm a market value of US$54.5 billion.
Most consumers use at least one product that contains Arm’s chips, though many people may not be familiar with the company itself. Its chip design is used in virtually all smartphones, the majority of tablets and digital TVs. More recently, Arm has expanded into artificial intelligence, smart devices, cloud computing, the metaverse and autonomous driving.
Arm’s offering is an important development for the IPO market, which has seen relatively few companies go public the past two years. It’s also a key moment for the Japanese technology investor Softbank, which acquired Arm in 2016, as well as investments banks such as Goldman Sachs that recently have taken in far less revenue from underwriting and advisory fees.
Softbank will retain a nearly 90 per cent stake in the Arm. It’s the biggest IPO since the electric truck maker Rivian débuted in November 2021 with a market value of more than US$66 billion.
Arm’s business centres on designing chips and licensing the intellectual property to customers, rather than chip manufacturing, for which it relies on partners. The company recorded US$2.68 billion of revenue in its last fiscal year, which ended in March, and had US$524 million in profit for that period.