Arm Aims for $50 Billion - $55 Billion IPO Valuation, Below SoftBank's Hopes

Chip designer Arm, owned by SoftBank, is preparing for an initial public offering (IPO) with a target valuation range of $50 billion to $55 billion, sources familiar with the matter have revealed. This range falls short of the $64 billion valuation suggested by SoftBank in a recent transaction. Arm is set to kick off its IPO roadshow in the coming week, with several major technology sector customers, including Apple, Samsung, Intel, and Nvidia, participating in the listing. Arm has also explored potential investments with some automotive industry customers.

Notably, SoftBank agreed last month to purchase a 25 percent stake in Arm, which it didn't directly control, for $16 billion from the Vision Fund, an investment fund it manages. SoftBank had been striving to convince investors that Arm should be valued closer to $80 billion. However, an insider emphasized that SoftBank remains optimistic that the final valuation will surpass the initial range.

According to an individual involved in the deal, preliminary meetings with investors to "test the waters" have been successful. Starting the roadshow with a conservative price range is a common strategy in large tech listings to help build momentum.

As for the strategic investors, SoftBank plans to sell about 10 percent of Arm in the IPO, contributing a relatively small portion of the more than $5 billion expected to be raised. Arm's IPO is anticipated to be the most valuable in the United States since November 2021 when carmaker Rivian debuted with an initial valuation of $70 billion. This IPO is being closely watched as a test of investor appetite for large listings following one of the most severe downturns in dealmaking in decades.