Arm closes IPO order books early due to strong demand

Due to the strong demand, the banks that are underwriting Arm’s $50bn IPO will close their orders a day sooner than originally planned.

The IPO of the UK-based designer chip, which has been more than fivefold oversubscribed, is now expected to close on Tuesday instead of the previously planned Wednesday.

The analysts added that Arm shares were expected to be priced Wednesday and could end up at the upper end of the range of $47-$51 per share, or even higher.

On a fully diluted base, at the upper end of this range, the IPO could raise $4.9bn in revenue for SoftBank, Arm’s parent company, and value the firm at $54.5bn. On Monday, the people warned that the price had not yet been set.

Arm has declined to comment.

The strong demand for Arm’s listing helped open the US window for listings after a lack of deals in this year. This encouraged other companies to pursue an IPO.

The San Francisco based ecommerce firm Instacart announced its price range on Monday for an IPO which would raise up $616mn. If all stock options are exercised and other rights, Instacart’s IPO could value the company at $9.3bn. This is less than a quarter its private valuation from two years ago.

Klaviyo, a marketing automation company, announced the pricing of its IPO on Monday. The company said that it would be selling 19.2mn share at between $25 and $27 per share. The company could be valued at $6.3bn. The company was valued at $9.5bn last time.

SoftBank, the current owner of Arm, intends to sell around 10 percent of its stake via Nasdaq. It hoped that the deal could value Arm as high as $70bn.

Cambridge-based Arm, despite reporting flat sales for its most recent financial period, has forecast an accelerating revenue increase boosted by artificial intelligence boom.

The demand for Arm shares has remained strong despite some investors’ concerns over a decline in profits during Arm’s latest quarter, and the company being exposed to multiple risk in China.

Arm’s smartphone chip market has stagnated in this year, but the company is still hoping to grow from its artificial intelligence customers and data centres. This is despite the fact that it only plays a minor role in building the large language models required for ChatGPT and generative AI systems.

Rene Haas is the chief executive of SoftBank’s chip designer. In a video pitch, he told potential investors that “AI will be everywhere, and it runs on Arm”.

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