Several of Arm Holdings Ltd.’s clients have agreed to invest in the chip designer’s initial public offering, including Apple Inc., Nvidia Corp., Alphabet Inc., and Advanced Micro Devices Inc.
According to the sources, Intel Corp, Samsung Electronics Co Ltd, Cadence Design Systems Inc., and Synopsys Inc., have also decided to take part in the offering as investors. Other potential investors are also in discussions to invest in the IPO, as the sources indicated, and the discussions are still ongoing.A valuation of between $50 billion and $55 billion is what SoftBank Group Corp., the company that owns the British company Arm, is aiming for, according to analysts. Arm’s clients have consented to make investments in that valuation range.
Even though it’s possible that demand for Arm’s shares may result in a higher value by the time the IPO prices are announced, the decision reflects a climb-down from the $64 billion valuation at which SoftBank acquired the 25% stake in the business it didn’t already hold from its $100 billion Vision Fund last month. Apple, Nvidia, and the other strategic investors have each committed to investing between $25 million and $100 million in the IPO.
According to analysts, 10% of the shares that will be sold in the IPO have been put aside by Arm and SoftBank for their clients. One of the individuals claimed that Amazon.com Inc., which had previously held discussions to invest in the IPO, has opted not to take part. The source asked to remain anonymous since the discussions are private. Arm’s commitment to not taking a position in the chip business is being put to the test by a stampede among its clients, which include the greatest technological companies in the world, to purchase shares in the IPO.
Analysts are of the opinion that the demand is being stoked by businesses’ desire to deepen their business ties with Arm and prevent competitors from gaining an advantage. Even if an investment in the IPO wouldn’t grant the investor a position on Arm’s board or the authority to direct strategy, it might fortify relationships with the other participating businesses and make it more difficult for a rival to buy Arm in the future. Requests for comment from Arm and SoftBank did not receive an instant response.
Nvidia, Synopsys, AMD, Intel, and Intel declined to comment.
Requests for comment from Alphabet, Amazon, Apple, Samsung, and Cadence were not immediately fulfilled. On Friday morning, The Wall Street Journal published an article about Arm’s target valuation.
