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Reports Claim SoftBank's Arm IPO Was Six Times Oversubscribed

Reports Claim SoftBank's Arm IPO Was Six Times Oversubscribed
According to people familiar with the situation, investor demand for Arm Holdings Plc, a chip designer owned by SoftBank Group Corp. that is seeking approximately $5 billion in its initial public offering, is six times what it is asking for.
The oversubscription increases the likelihood that the business will at least reach its planned price range of $47 to $51 per share, according to the sources, even though it does not ensure a great performance for Arm's massive U.S. initial public offering (IPO).
On a fully diluted basis, the price range puts Arm at $50 billion to $54.5 billion. This would be a decline from the $64 billion valuation that SoftBank last month used to acquire the 25% share in the company that it did not already hold from the $100 billion Vision Fund that it administers.
It is still uncertain whether Arm can generate sufficient investor interest to ask for a better value prior to the pricing of its IPO on September 13. According to the sources, Arm will choose whether to increase its IPO pricing range early next week.
The sources asked to remain anonymous because the information is private. Arm choose not to respond. The IPO was oversubscribed, according to an earlier Friday story from The Financial Times.
Arm began marketing this week for what is expected to be the largest U.S. IPO in two years, hoping to persuade potential investors that it has growth opportunities outside of the 99%-dominant mobile phone market.
Arm's revenue has been flat since the global economy has been slowing down due to weak mobile demand. In comparison to the previous year's $2.7 billion in revenue, the total for the 12 months ending in March was $2.68 billion.
The cloud computing market, of which Arm only has a 10% share and therefore more room to grow, is anticipated to increase at an annual rate of 17% through 2025, in part because of developments in artificial intelligence, Arm informed prospective investors in New York on Thursday.
It is anticipated that the automobile market, which currently controls 41% of global sales, will rise by 16% while the mobile sector is only anticipated to grow by 6%.
Additionally, Arm informed investors that since it began collecting royalties in the early 1990s, which make up the majority of its earnings, they had been building up. In the most recent fiscal year, royalties brought in $1.68 billion, up from $1.56 billion the year before.
Given geopolitical concerns with the US that have caused a race to secure chip supplies, investors have been closely watching Arm's exposure to China. 24.5% of Arm's $2.68 billion in revenue for the fiscal year 2023 came from sales in China.

Christopher J. Mitchell

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