Strong demand pushes Arm to close IPO order book early

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The banks underwriting Arm’s $50bn listing will close orders for shares a day earlier than planned owing to strong demand for the biggest initial public offering in nearly two years.

People familiar with the matter said the IPO for the UK-based chip designer, which is more than five times oversubscribed, will close on Tuesday, instead of Wednesday as previously intended.

They added that shares in Arm were still expected to be priced on Wednesday, and could land towards the top end of the initial range of $47-$51 a share or even higher than that.

At the top end of the current range, the IPO would raise $4.9bn for Arm’s parent SoftBank and value the company at $54.5bn, on a fully diluted basis. The people cautioned on Monday that the price was still to be set.

Arm declined to comment.

Strong demand from investors for Arm’s listing has helped to crack open the window for listings in the US after a dearth of such deals this year, encouraging other companies to pursue a public offering.

On Monday, the San Francisco-based ecommerce company Instacart announced its price range for an IPO that would raise up to $616mn. On a fully diluted basis, if all stock options and other rights are exercised, the IPO would value Instacart at up to $9.3bn, less than a quarter of its private valuation two years ago.

Marketing automation company Klaviyo also announced its IPO pricing on Monday. It said it would sell 19.2mn shares at a range of $25 to $27 a share. This would value the company at up to $6.3bn. It was last valued at $9.5bn.

Arm’s current owner, SoftBank, plans to sell about 10 per cent of its stake in the company via a Nasdaq listing. It had originally hoped the deal would value Arm at as much as $70bn.

Despite reporting flat sales in its most recent financial year, Cambridge-based Arm has forecast accelerating revenue growth boosted by the artificial intelligence boom.

Demand for its shares has held up in spite of some investors’ concerns about a drop in profits in Arm’s most recent quarter and the company’s exposure to multiple risks in China.

Arm’s core market of smartphone chips has stagnated this year but it is hoping for growth from artificial intelligence and data centre customers, despite playing only a peripheral role in the technology required to build the kinds of large language models that power ChatGPT and other generative AI systems.

“AI is going to be everywhere and it all runs on Arm,” Rene Haas, the SoftBank-owned chip designer’s chief executive, told prospective investors in a pitch video seen by the Financial Times.