Arm mainly designs CPUs, but the generative AI revolution requires increasingly powerful GPUs, or graphics processing units.
Through an Initial Public Offering of some 10% of the capital of the jewel of British technology, SoftBank hopes to raise between US$4.5 billion and US$5.2 billion, valuing the company at up to US$52 billion. SoftBank suffered enormous losses over its investments in shared office space provider WeWork and China’s e-commerce giant Alibaba.“Nobody disputes that this is a quality company that has substantial sales, substantial profits…” said Jay Ritter, a professor specialising in stock launches at the University of Florida. “The question is about future growth potential.”
The IPO also poses a large-as-life test for the capital markets, which have not seen a stock introduction of similar magnitude since that of American e-vehicle maker Rivian, valued at US$77 billion in November 2021. In the 18 months from January 2022 through June 2023, just US$18.7 billion was raised in US stock offerings, compared to US$155.8 billion in the single year of 2021, according to EY Capital Advisors.Roberts pointed out that 27 banks are taking part in the IPO.
“If this deal goes well, that’s a good harbinger for momentum building into a stronger 2024,” Roberts said.But another analyst, Avery Spear of Renaissance Capital, said the Arm deal would be just one data point.