Arm Ltd, the chip designer backed by SoftBank Group Corp, is in talks with Nvidia Corp to join a group of potential investors to anchor its initial public offering (IPO), according to the Financial Times (FT).
Nvidia, a long-time partner and client of Arm, is seeking to invest at a valuation of US$35 billion (RM162.78 billion) to US$40 billion, the paper said, citing unidentified people briefed on the talks. That compares with a valuation closer to US$80 billion that SoftBank wants, it said.
Bloomberg earlier reported that Arm was in talks with possible strategic investors including Nvidia competitor Intel Corp to participate in the year’s biggest IPO.
Bringing in anchor investors can help drum up interest and momentum for an IPO, especially given the elevated valuation that SoftBank is seeking. Arm’s success is critical for the Tokyo-based investment firm — which bought Arm for US$32 billion in 2016 — to regain its footing after losing billions of dollars on start-up investments.
SoftBank founder Masayoshi Son has said he hopes the Arm IPO can be the largest ever by a chip company. Arm’s valuation still hasn’t been set and the company could be valued anywhere from US$30 billion to US$70 billion, Bloomberg News previously reported.
Shares in SoftBank erased earlier losses and rose more than 2% in Tokyo on Wednesday (July 12).
Arm is looking to raise as much as US$10 billion in a New York listing later this year, after rejecting appeals from UK prime ministers to return to London, where it once traded.
The firm’s tech is found in most of the world’s smartphones and is pervasive across the electronics industry. SoftBank executives have been pitching lofty valuations on the chip designer by presenting it as an AI play with technology supporting AI infrastructure.
Anchor investors buying US$100 million to US$200 million worth of shares are increasingly popular for semiconductor-related IPOs. Growth equity firm General Atlantic invested about US$100 million in Intel-backed Mobileye Global Inc’s IPO last year, while Qualcomm Inc backed GlobalFoundries Inc’s listing in 2021.
