ARM, a British semiconductor design company set to be listed on Nasdaq, witnessed a competition rate of 5 to 1 for its public offering. While not particularly high, this rate is deemed a triumph given the company’s overvalued corporate value of $52 billion. The initial public offering (IPO) size was significantly reduced to within 10%, and the discount price, which was 20 to 30% lower than rumored, served as a distraction for investors, who believed it was an opportune moment to purchase. In a recent briefing for the IPO, ARM and its largest shareholder, Softbank, sought to highlight the growth potential of artificial intelligence (AI).
Although Arm’s core smartphone chip market has experienced stagnation this year, the technology needed to construct large-scale language models supporting ChatGPT and other generative AI systems is anticipated to witness growth. ARM is hopeful for growth through its AI and data center clientele. René Haas, CEO of Softbank-owned chip designer company René Haas, emphasized the ubiquity of AI, stating, “AI will be everywhere and everything will run on Arm.” ARM executives forecast a minimum of 20% revenue growth until March 2025, driven by increased royalties paid by smartphone manufacturers.
Over 100 global fund managers were gathered by the 28 financial advisers brokering ARM’s IPO at a New York hotel this week, aiming to convince them of the potential fortune they could amass by investing in AI. Softbank’s strategy for IPO transactions and pricing gained considerable attention during this subscription process. By initially offering a mere 9.6% of the total shares in the market, Softbank reduced supply, causing prices to surge. The early mention of ARM’s enterprise value as $60 to $70 billion also sparked controversy surrounding its overvaluation.
To maintain liquidity, Softbank intends to offer more than 90% of its shares to banks based on the listed market price and secure a mortgage loan, thus keeping prices high by reducing volume. Given that ARM was acquired for $32 billion, it is expected that a rapid repayment of the principal can be achieved by liquidating 20-30% of the shares. Softbank has utilized a similar strategy in the past with Alibaba, but the target has now shifted.
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Money Today New York = Reporter Joon-Sik Park | 2023.09.09 06:44
The competition rate for the public offering of ARM, a British semiconductor design company due to be listed on Nasdaq, was 5 to 1. Although the competition rate is not high, it seems to be a box office success given the overvalued corporate value of 52 billion dollars. The size of the IPO (initial public offering) appears to have been significantly reduced to within 10%, and the discount price which was 20 to 30% lower than the rumor at the time of the actual sale was a distraction the investors say, ‘If it’s not now, I can’t buy it at this price’. . According to the Financial Times (FT) on the 8th (local time), ARM and Softbank, the largest shareholder, are said to have appealed to investors as much as possible about the growth potential of AI (artificial intelligence) in a briefing for this IPO ( initial public offering).
The core smartphone chip market, where Arm had strengths, has been stagnant this year, but growth is expected in the technology needed to build large-scale language models that support ChatGPT and other generative AI systems. ARM said it expects growth from its AI and data center customers.
The 28 financial advisers brokering Arm’s IPO gathered more than 100 of the world’s biggest fund managers in a New York hotel this week to convince them that this was their chance to make a fortune in AI. In particular, Rene Haas, CEO of Softbank-owned chip designer company Rene Haas, stressed, “AI will be everywhere and everything will run on Arm.” ARM executives suggest the company will achieve at least 20% revenue growth through March 2025, driven by rising royalties paid by smartphone makers.
However, in this subscription, Softbank’s strategy, which is good for IPO transactions and pricing, shone rather than a rosy blueprint for the company. Softbank set the initial share to sell in the market at just 9.6% of the total, reducing supply and causing prices to rise. In particular, in the early days, Softbank mentioned that the value of the ARM enterprise was 60 to 70 billion dollars, causing controversy about the overvaluation.
Instead, Softbank plans to ensure liquidity by offering a portion of its share of more than 90% to the bank based on the listed market price and taking a mortgage loan while keeping the price high by reducing the volume. Since ARM was bought for $32 billion, it is anticipated that it will be possible to quickly repay the principal if 20-30% of the share is liquidated. Softbank took this strategy through Alibaba in the past, but this time, it is analyzed that only the target has changed.
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