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According to Reuters, SoftBank’s Arm is preparing to raise $8 billion in its US Initial Public Offering (IPO).
Get the latest updates on this unprecedented move and find out what it means for you.
Introduction to SoftBank and its Arm
Softbank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Tokyo, Japan. It operates in broadband infrastructure, fixed-line telecommunications, e-commerce, internet, technology services, finance, media and marketing, semiconductor design and other businesses. SoftBank is Japan’s third largest publicly traded company after Toyota Motor Corporation and Nippon Telegraph and Telephone Corporation (NTT).
SoftBank’s subsidiary – Arm Limited – was acquired by SoftBank in 2016. A leading player in the global centralized processing unit market for over 30 years, Arm provides silicon designs that power mobile phones and tablets with long-lasting battery life and advanced features not achievable with conventional processor architectures.
Arm seeks to raise $8 billion from publicly listing its US arm on the US Stock Exchange (NYSE) through what will be one of the year’s biggest technology IPOs. This move reflects SoftBank’s intention to monetize Arm’s value for investors across its portfolio companies as it continues its strategic retreat from non-core businesses amid current market conditions.
SoftBank’s Arm Aims to Raise $8 Billion in US IPO: Reuters
SoftBank Group Corp’s Arm Holding Co., the British chip designer, recently announced plans to raise to $8 billion in its long-awaited U.S. listing, in what would be the largest IPO of a technology company since 2015. The deal includes a primary offering of common shares by SoftBank and a secondary offering by an affiliate of SoftBank and would likely put Arm’s value at around $40 billion.
SoftBank acquired Arm in 2016 for £24 billion ($32 billion). At the time, it was Softbank’s largest ever purchase. Arm joins other big tech names including Uber Technologies Inc. and Slack Technologies Inc, who both went public last year through their debuts on the domestic market.
Arm is best known for its mobile processor technology used to power smartphones and tablets from companies like Apple Inc., Samsung Electronics Co., and Huawei Technologies Co Ltd. Its processor chips are also used in internet-connected devices such as cars, home appliances, wearables and drones. These processors make up about 95% of the market share for mobile chips connected to 4G networks worldwide and are likely to emerge as 5G networks become more widely adopted.
While it works with some big-name tech companies, Arm focuses on licensing its designs rather than manufacturing them directly which is one reason why it has been able to remain profitable despite increasingly stiff competition from larger rivals like Intel Corp., Advanced Micro Devices Inc., Qualcomm Corp., Huawei’s HiSilicon unit as well as Samsung LSI Business Unit (now System LSI). In addition, going public will give Arm access to much needed capital that can be invested not only in research & development but also help build out its business strategy going forward into new markets such as AI & automation and automotive partnerships.
Reasons for SoftBank’s Arm to Raise Funds
SoftBank’s Arm Limited plans to raise around $8 billion in its initial public offering (IPO) by listing its shares in the U.S. stock market. It is the first major Japanese company to list its shares in the U.S., and one of the few global companies raising funds through an IPO–a process used to raise capital from investors by issuing publicly traded shares on a stock exchange.
The reasons for SoftBank’s Arm to raise funds are mainly twofold. First, it intends to further fund world-leading AI research and development in its core technology businesses and create new opportunities for growth in emerging markets such as China, India, Brazil and Mexico.
Second, ARM has been increasing its global presence and scale of operations through strategic investments and partnerships with other technology companies, including Apple, Microsoft and Sony. The pre-IPO financing from these strategic investments will strengthen ARM’s product portfolio while supporting future expansion initiatives globally.
Overall, SoftBank’s Arm aims to use the proceeds raised from its US IPO to further finance research and development into leading AI technologies, expand strategically into new markets around the world, and support long-term growth prospects associated with a successful public listing on a high-profile international exchange such as Nasdaq or NYSE American Stock Exchange (AMEX).
Regulatory Requirements for SoftBank’s Arm US IPO
To complete a successful Initial Public Offering (IPO) of Softbank’s Arm business in the US, the company and its advisors must comply with applicable federal regulations, including those imposed by the US Securities and Exchange Commission (SEC). The SEC regulates the offering and sale of securities in interstate commerce and other activities including stock exchanges, self-regulatory organizations like national securities exchanges, brokers, dealers and investment advisers.
The registration process ensures that investors have access to material information about security offerings — this is known as disclosure. Companies must file a registration statement with the SEC containing information about the company’s business operations and financial results, risk factors associated with particular investments, related party transactions or conflicts of interest in offering securities to the public. In addition, companies must provide a prospectus that includes more detailed information on their current affairs and projected course of business.
The underwriters for SoftBank’s Arm IPO may also be subject to additional regulation if they are registered broker-dealers or affiliated with one. Depending on their role in the offering—for example as an issuer/merchant banker or syndicate manager—underwriters for IPOs are required to follow specific rules set forth by FINRA (the Financial Industry Regulatory Authority), including filing reports with FINRA before commencement of distributions; taking reasonable steps investigate before filing a registration statement; presenting competing bids fairly; pricing securities appropriately before distribution; maintaining separation between research analysts and sales personnel; disclosing potential conflict interests; distributing offering documents accurately; and providing uniformity among all participating brokers instead of manipulation market prices while avoiding insider trading practices.
Impact of SoftBank’s Arm US IPO
SoftBank’s Arm Holdings, a pioneering British semiconductor designer, aims to raise around $8 billion in an initial public offering (IPO) on the New York Stock Exchange in the second half of 2021. The deal marks a major milestone in SoftBank’s ambitions to become the world’s leading tech investment firm, providing much-needed capital to fuel its future growth.
The IPO will strengthen SoftBank’s financial position and provide it with valuable access to the US stock market. This could positively impact its overall portfolio, which has been weighed down by significant losses due to a lack of liquidity in recent months.
The listing will also provide a platform for more shareholders, enhancing liquidity and allowing for more sophisticated corporate governance practices such as investor communication and increased visibility for potential acquisitions or joint ventures. Arm’s presence on a US exchange could bolster its presence in important reaches like AI and IoT computing markets, helping it maintain competitive advantages over other chip makers globally.
Overall, SoftBank’s proposed Arm IPO looks set to be an advantageous move that commemorates this decade-long partnership while simultaneously opening up expanded opportunities for investor participation across SoftBank’s expansive technology investments hardware range.
Market Reaction to SoftBank’s Arm US IPO
SoftBank Group’s Arm seeks to raise $8 billion by listing its chip technology business in the United States. It would be the first US initial public offering (IPO) by a Japanese company since 2012 and the largest IPO since Uber’s debut. This news has understandably caused excitement in the US and global markets and may indicate further foreign investment into US tech companies.
The hype surrounding SoftBank’s Arm IPO is expected to spur a wave of muted optimism among investors, as it dedicates a significant stake in overseas markets for listing its chip technology on Wall Street. The IPO will also help break China’s stranglehold on semiconductor production. In addition, this industry disruption could potentially open new doors for foreign investors looking for new opportunities amid current global uncertainty.
Additionally, Softbank’s long-term plans to further develop their current stake in overseas markets make Arm’s decision to go public even more alluring, as they will likely focus on emerging technologies such as artificial intelligence, quantum computing and robotics to expand their niche market share. As a result, analysts anticipate that this move will attract more attention from institutional investors seeking investments that can hold their steady even during heightened economic uncertainty.
Softbank’s decision to list its chip technology business in the United States signals an important shift toward foreign expansion. It provides positive market sentiment while opening up US tech markets to additional international investment.
Outlook for SoftBank’s Arm US IPO
SoftBank Group Corp’s chipmaker arm, Arm Ltd., plans to sell shares worth $8 billion in the US stock market as part of an initial public offering (IPO). This would be the largest tech IPO this year, bringing SoftBank’s total market value above $150 billion.
If successful, it would boost SoftBank’s strong balance sheet and help the company fund its future investments. The IPO is expected to value Arm at over $40 billion, more than double its estimated book value of $17.5 billion.
Experts expect investors will favor the offering due to Arm’s strong growth prospects, buoyed by increased demand for semiconductors in mobile devices and artificial intelligence applications. Additionally, Arm has the advantage of not relying on one customer for revenue. Analysts believe that this makes it more attractive than many other tech companies with a heavily concentrated customer base, which can be at risk when any customer’s sales decline or choose a different supplier for products/services.
Despite these positive factors, there are also risks associated with Arm’s IPO such as its low profitability margins relative to peers, intense competition from other chipmakers like Intel Corp., and an erratic economic climate due to Covid-19 pandemic which may dampen investor sentiment towards technology stocks. Therefore, investors may take some time before deciding whether to invest in SoftBank’s US operations.
It remains to be seen how SoftBank’s Arm Holdings fares in its plans for an IPO, however if successful it could raise $8 billion and become one of the largest technology firms to go public in recent years. The impact of this move could be far-reaching and have implications for the technology industry as a whole. Monitoring if rivals like Intel and Qualcomm can keep up with the changing landscape will be interesting.
Ultimately, the success of SoftBank’s Arm in its planned US IPO is likely to depend on market conditions at the time of listing, so investors should also proceed with caution upon launch.
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