UK microchip designer ARM Holdings plc (LSE:ARM) will hold its expected initial public offer in New York but looks likely to also obtain a secondary listing in London.
The Cambridge-headquartered company’s current owner, SoftBank, is set on an IPO and primary listing on Nasdaq, where valuations for tech companies are markedly higher.
A valuation of US$40bn is being mooted for ARM, up from US$32bn when it was taken over in 2016 but below the agreed US$66bn sale to Nvidia that fell apart earlier this year.
However, after significant overtures from the UK government, including meetings with chancellor Rishi Sunak and a letter from the prime minister, the Japanese company said it will list some of its shares in London as well, according to a Bloomberg report.
SoftBank boss Masayoshi Son previously said that ARM would become a publicly traded company by the end of its current financial year to the end of March 2023.
The government is “working closely with” ARM on the IPO process, Philp told the FT this week, pledging that the UK will offer a “very light-touch approach” to forthcoming digital regulations.
Has ARM got stronger?
Having been first spun out of Acorn Computers in 1990, SoftBank bought ARM for £17 per share in 2016, it has grown in value as its chip designs have become ever more integral to Android and Apple smartphones, with the latter switching its Mac computers over to ARM from Intel in 2020.
In the last year before its takeover, the business made US$387.6mln and US$130.1mln of pre-tax profit.
As of its results last month, revenues had risen 35% to US$2.7bn as a record 29.2bn chips were shipped.
Licensing rose 61% to US$1.13bn, while royalties were up 20% US$1.54bn amid growth of 5G smartphones, which chief executive Rene Haas put down to more advanced driver assistance systems (ADAS) and in-vehicle infotainment (IVI) chips being put in new cars.
Licensing is the fee that customers pay to use ARM’s blueprints to fabricate their own system-on-chips or processors, while royalties are later paid per unit once the chips or processor is shipped in devices.
However, after the Nvidia deal fell through on the back of resistance from regulators and customers, Softbank began to prepare the business for an IPO by promoting former intellectual property chief Haas to CEO, regaining control of its Chinese business and planning a cull of 15% of the global workforce.
It employed around 4,000 people at the time of its takeover and topped 6,000 at last count, including around 3,560 in Cambridge.
Cuts of around a tenth of UK staff are expected, Haas told employees in March.
Hass said the group needed “to be more disciplined about our costs and where we’re investing” and that “to stay competitive, we need to remove duplication of work... stop work that is no longer critical to our future success”.