Arm Seen Signing Big Tech Firms for $50-55 Billion IPO

Some of the world’s biggest tech companies have agreed to invest in Arm Holdings’ upcoming listing on the Nasdaq exchange.

Apple, Nvidia, Alphabet, AMD, as well as Intel and Samsung Electronics, plus Cadence Design Systems and Synopsys are some of the companies and clients who have said they will back the chip designer’s initial public offering, sources have revealed.

Talks are ongoing and other potential investors are also in discussions to invest in the IPO, the sources added.

SoftBank Group, which owns Britain-based Arm, is targeting a valuation between $50-55 billion, it was revealed on Friday. Arm’s clients have agreed to invest in that valuation range, the sources said.

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While it is possible that demand for Arm’s shares will lead to a higher valuation by the time the IPO prices, the move represents a climb-down from the $64 billion valuation at which SoftBank acquired the 25% stake in the company it did not already own from its $100 billion Vision Fund last month.

Apple, Nvidia and the other strategic investors have agreed to invest between $25 million and $100 million each in the blockbuster IPO, the sources said.

Arm and SoftBank have set aside 10% of the shares to be sold in the IPO for its clients. The listing is expected to occur within two weeks.

Amazon.com, which previously held talks to invest in the IPO, has decided not to participate, one of the sources said, requesting anonymity as the discussions are confidential.

Clients rush to snap up shares

A scramble among Arm’s clients, comprising the world’s biggest technology companies, to snap up shares in the IPO is testing the semiconductor designer’s adherence to not picking sides in the chip industry.

The interest is fueled by a desire by companies to expand their commercial relationship with Arm and make sure rivals do not gain an edge.

While an investment in the IPO would not come with a seat on Arm’s board or ability to dictate strategy, it could strengthen ties with each participating company and make it harder for a competitor to acquire Arm later.

Arm and SoftBank did not immediately respond to requests for comment.

AMD (Advanced Micro Devices), Intel, Synopsys and Nvidia declined to comment. Alphabet, Amazon, Apple, Samsung and Cadence did not immediately respond to requests for comment. The Wall Street Journal reported on Arm’s valuation target earlier on Friday.