(News Bulletin 247) – The semiconductor group, a division of Softbank, will take its first steps on the Nasdaq this Thursday at market opening. Its IPO price was set at $51 per share.

D-day for what, according to Bloomberg, constitutes the world’s largest IPO of the year. The semiconductor group Arm, a division of the Japanese conglomerate Softbank, itself present in telephone and Internet access services, will take its first steps on Wall Street this afternoon.

Arm is a British company which was bought in 2016 by Softbank, and which thus snubbed the London Stock Exchange for its return to the stock market for the benefit of Wall Street. It is therefore via ADSs (“American depositary shares”), financial products which allow investors in the United States to own securities of foreign companies, that the group signs its return to the stock market.

On Wednesday evening, Arm indicated that the approximately 95.5 million ADSs it will issue as part of this IPO would have an initial price of $51 per unit. This will therefore allow it to raise $4.875 billion, the largest IPO of the year, ahead of the $4.37 billion raised by Kenvue, a subsidiary of Johnson & Johnson, last May. According to Bloomberg, this fundraising values ​​Arm at $54.5 billion.

The group will list on Nasdaq with the ticker code “ARM”. Softbank will retain 90% of the capital, post-IPO according to Bloomberg.

Too high a valuation?

It remains to be seen what reception the market will give to this return to the stock market. The introduction of Arm comes as investors look to see which stocks, like Nvidia, can see their business model driven by the rise of generative artificial intelligence, at the heart of ChatGPT.

However, Arm’s central processing units (CPUs) are not necessarily as affected by the surge in AI as Nvidia’s graphics processors (GPUs). “Softbank’s filing for Arm’s IPO mentions AI 47 times but fails to demonstrate that Arm is an AI company in the same way as Nvidia. However, if CPUs are more widely used “than GPUs in end-user devices such as smartphones to run AI models, Arm could achieve good results in the field of AI”, judged Mike Orme of GlobalData at the end of August.

“Overall, the current times are not favorable for Arm’s IPO, unless it somehow manages to focus investors’ attention on the fear to miss out on AI. Otherwise, a stubbornly sluggish smartphone market, coupled with the Arm China debacle – China accounting for 24% of Arm’s revenue, now at risk – will significantly reduce the valuation.” , he continued.

Based on the introductory price of $51 per share, “Arm’s valuation for a semiconductor company is excessively high compared to any market player other than Nvidia,” notes CNBC. .

Founded in 1990, Arm generated revenue of $2.68 billion in its annual fiscal year ending March 2023, for a profit of $524 million. The British company estimates that the world has around 30 billion chips equipped with its technologies (at the end of March 2023) and that 70% of the world’s population uses products where its devices are present.