| From: Glenn Petersen | 4/12/2023 7:55:24 PM | | | | | | SoftBank moves to sell down most of its Alibaba stake
Japanese investor makes $7.2bn from forward sales of shares in Chinese ecommerce group as lucrative
Ryan McMorrow in Beijing, Eleanor Olcott in Hong Kong and Kana Inagaki in Tokyo
AN HOUR AGO
Financial Times
SoftBank has moved to sell almost all of its remaining shareholding in Alibaba, limiting its exposure to China and raising cash as the market downturn pummels the value of its technology investments.
The Japanese group, led by billionaire founder Masayoshi Son, has sold about $7.2bn worth of Alibaba shares this year through prepaid forward contracts, after a record $29bn selldown last year.
The forward sales, revealed through a Financial Times analysis of regulatory filings sent by post to the US Securities and Exchange Commission, will eventually cut SoftBank’s stake in the $262bn Chinese ecommerce group to just 3.8 per cent.
The contracts allow SoftBank the option to buy back the shares, but the group has settled previous deals by handing over the stock. The Japanese investor once owned as much as 34 per cent of Alibaba.
SoftBank’s selldown comes at a pivotal moment for the Japanese group, which is planning a blockbuster listing of UK chip designer Arm as it seeks to recover from a spate of failed investments and unprecedented losses. For Alibaba, it will mean the retreat of a longtime backer just as the Chinese group attempts to reinvent itself by splitting into six entities.
SoftBank’s selling spree has come as the Chinese group’s shares have plumbed six-year lows, a disappointing conclusion to one of the most successful technology investments ever made. Son paid $20mn for the bulk of SoftBank’s holding in the fledgling Chinese group more than two decades ago after meeting founder Jack Ma.
“He had no business plan and zero revenue, employees maybe 35 [or] 40,” Son later said on Bloomberg TV. “But his eyes [were] very strong, strong eyes, strong shining eyes. I could tell from the way he talked, the way he looked [at things], he has a charisma, he has a leadership.”
Ma’s penchant for speaking his mind turned into a liability in October 2020 when he criticised China’s state-owned banks at a financial summit in Shanghai. Beijing then suspended the blockbuster IPO of Alibaba’s sister company Ant, as President Xi Jinping launched a campaign to rein in the country’s tech groups.
The crackdown has cut Alibaba’s share price by 70 per cent, leaving SoftBank selling most of its holding at prices on a par with where Alibaba opened for trading in New York eight years ago.
Over the past 14 months, SoftBank reaped, on average, $92 a share from the forward sales of 389mn Alibaba shares, far below the company’s all-time high of $317 a share, according to filings supplied by data provider The Washington Service.
They show SoftBank most recently raised about $4.5bn in February from the forward sales of 46mn shares, coming after the sale of 30mn shares for $2.7bn in late December. SoftBank said the latter sale was not fully completed by the end of December and would be accounted for in its yet to be released financial report for the quarter that ended on March 31.
SoftBank declined to comment on the regulatory filings. But it said the Alibaba transactions reflected its shift to “a defensive mode” to address a more uncertain business environment. “We are bolstering our financial stability by increasing our liquidity on hand by raising cash,” it said.
It added that the additional amount it raised from Alibaba shares would be revealed when it reports its fourth-quarter results in May.
With forward sales, SoftBank generally lends its Alibaba shares to a broker, which sells the shares into the market over a period of days or weeks. The broker takes a fee before returning the proceeds to the Japanese group.
When the contracts come due, SoftBank can either fully relinquish its claim to the shares or pay the broker the market price to repurchase the shares on its behalf.
The filings show most of the recent deals were handled by Barclays, Mizuho Securities and SMBC Nikko Securities, which would earn less than 1 per cent of the proceeds as fees, according to a banker familiar with the deals. Their structure allows SoftBank to delay paying capital gains tax until settlement.
At the end of February, SoftBank had only 98mn shares of Alibaba left to sell, according to the FT’s estimates. On March 30, the group shifted how it held another 22.3mn shares “in light of the potential to use them for financing in the future,” SoftBank said in a statement.
While SoftBank has said that the monetisation of Alibaba shares was to shore up its finances, some investors have seen the move as a desperate means to lift its earnings figures, with analysts projecting a second consecutive year of heavy losses.
SoftBank has put cash harvested from the Alibaba selldown into its Vision Fund II, paid off debt and repurchased shares. Billions are also piling up in cash on its balance sheet, which stood at ¥5.8tn ($43bn) at the end of December, leading to a growing internal debate over how to spend the money, according to a person close to SoftBank.
SoftBank said it would continue to be selective with its investments, citing uncertain market conditions.
“There are divergent views internally on whether we should continue to be a bit more defensive?.?.?.?or whether now is the time to get back into investing,” said the person close to SoftBank. “[Executives] are coming around more and more to opening the spigot again.”
SoftBank moves to sell down most of its Alibaba stake | Financial Times (archive.ph) |
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| From: Glenn Petersen | 4/29/2023 2:30:33 PM | | | | | | SoftBank's Arm registers for blockbuster U.S. IPO
By Anirban Sen and Echo Wang
Reuters
April 29, 2023
NEW YORK, April 29 (Reuters) - SoftBank Group Corp's (9984.T) chip maker Arm Ltd has filed with regulators confidentially for a U.S. stock market listing, Arm said on Saturday, setting the stage for this year's largest initial public offering.
The IPO registration shows that Softbank is pressing ahead with the blockbuster offering despite adverse market conditions, after saying in March that it planned to list Arm in the U.S. stock market.
U.S. IPOs, excluding listings for special purpose acquisition companies, are down about 22% to a total of just $2.35 billion year-to-date, according to Dealogic, as stock market volatility and economic uncertainty put many IPO hopefuls off.
Arm plans to sell its shares on Nasdaq later this year, seeking to raise between $8 billion and $10 billion, people familiar with the matter said. In a statement, which confirmed an earlier Reuters report on the planned IPO, Arm said the size and price range for the offering has not yet been determined.
The sources cautioned that the exact timing and size of the IPO are subject to market conditions and asked not to be identified because the matter is confidential.
SoftBank and Arm declined to comment.
There are signs that the IPO market is beginning to thaw. Johnson & Johnson Inc (JNJ.N) is preparing to list its consumer health business Kenvue Inc (KVUE.N) in New York next week, hoping to raise about $3.5 billion.
SoftBank has been targeting a listing for Arm since its deal to sell the chip designer to Nvidia Corp (NVDA.O) for $40 billion collapsed last year because of objections from U.S. and European antitrust regulators.
Since then, Arm's business has fared better than the broader chip industry thanks to its focus on data center servers and personal computers that generate higher royalty payments. The company said sales were up 28% in its most recent quarter.
Arm's IPO is expected to boost the fortunes of SoftBank, which is battling to turn around its giant Vision Fund, which has been hit by losses due to the declining valuations of many of its holdings in technology startups.
Earlier this year, Arm rebuffed a campaign from the British government to list its shares in London and said it would pursue a flotation on a U.S. exchange.
Arm's IPO preparations are being led by Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N), Barclays (BARC.L) and Mizuho Financial Group (8411.T).
Reporting by Anirban Sen and Echo Wang in New York; additional reporting by Stephen Nellis in San Francisco; editing by Jonathan Oatis |
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| From: Glenn Petersen | 5/11/2023 5:41:09 AM | | | | | | SoftBank Vision Fund Loses $32 Billion on Weak Startup Values
By Min Jeong Lee and Takahiko Hyuga
Bloomberg
May 11, 2023, 6:05 AM UTC
SoftBank Group Corp.’s Vision Fund unit reported a record annual loss after a recent global stock market rebound failed to outweigh three straight quarters of hefty writedowns.
The Vision Fund unit lost ¥4.3 trillion ($32 billion) in the year ended March, compared with a ¥2.6 trillion loss the previous year. It was the segment’s biggest loss since founder Masayoshi Son launched his first Saudi and Abu Dhabi-backed fund in 2017.
The Nasdaq 100 index, a benchmark for tech stock performance, rallied 20% during the March quarter, lifting share prices for some of SoftBank’s biggest investments. Coupang Inc. gained around 9% and Didi Global Inc. about 20% during the period. But most of the Vision Fund portfolio firms are still reeling from the brunt of last year’s stock market collapse.
Many of the privately-held companies that SoftBank’s invested in are not yet profitable, while the IPO market remains lackluster. “I remain cautious about the rest of the year, and private companies could continue to drag down valuations,” said Victor Galliano, an independent analyst who publishes on Smartkarma.
The billionaire Son has said the company will remain in defense mode until financial markets recover. SoftBank is in the process of divesting a number of its assets to clean up its balance sheet and appease worried investors, while promoting the highly-anticipated initial public offering of Arm Ltd.
Bankers have pitched a valuation of between $30 billion to $70 billion for Arm’s listing, a wide range reflecting the challenges of valuing the firm against a backdrop of volatile semiconductor equity prices.
“The Arm story is key and valuation is important, but that may be more at the mercy of markets than SoftBank would like,” said Mio Kato, an analyst from LightStream Research who publishes on Smartkarma.
SoftBank offloaded an additional $7.3 billion in Alibaba shares this year through prepaid forward contracts, according to a Bloomberg analysis of regulatory filings. This may have reduced SoftBank’s Alibaba stock to around 3.8%. Last month, the Japanese conglomerate said it is selling its early-stage venture capital arm SoftBank Ventures Asia Corp. to an entity led by Taizo Son, the younger brother of Son. Terms of the deal weren’t disclosed.
The sale of the startup incubator could ease SoftBank’s financing burden, while offloading Alibaba shares in the wake of the e-commerce leader’s plans to split into six parts would help maximize SoftBank’s divestment income, Bloomberg Intelligence analyst Marvin Lo wrote in a note last month.
SoftBank is nearing a deal to sell Fortress Investment Group to Mubadala for as much as $3 billion, the Financial Times reported, citing unidentified people briefed on the matter.
That would help SoftBank’s share price, Galliano said. “The focus for now has to be realizing investments where possible and reducing leverage, and we look forward to perhaps more disclosure on Masa’s debts with the group.”
Investors are not yet declaring the bottom for the venture capital sector, given the recent collapses of Silicon Valley Bank and First Republic Bank, which provided funding support to the startup ecosystem.
“Markets remain volatile and the near-term outlook for Vision Fund remains murky,” said Kirk Boodry, an analyst with Astris Advisory.
\
SoftBank Vision Fund Loses $32 Billion on Weak Startup Values - Bloomberg (archive.ph) |
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| From: Glenn Petersen | 6/4/2023 6:04:42 AM | | | | | | I think that Softbank invested $355 million into Zume,
Fallen Pizza Startup Zume Shuts Down After Raising Millions
-- The company pulled in about $450 million from SoftBank, others
-- Baking pizza with robots in trucks was a technical challenge
A robot places a pizza into an oven at Zume Pizza in Mountain View, California, in 2016.Photographer: Marcio Jose Sanchez/AP Photo
----------------------------
By Sarah McBride
Bloomberg
June 3, 2023, 2:10 AM UTC
Zume Inc., a one-time robot pizza business that came to represent the excesses of pre-pandemic venture investing, has shut operations, two people familiar with the matter said.
The company had raised about $450 million from SoftBank Group Corp.’s Vision Fund and others. It has retained Sherwood Partners, a restructuring firm, to sell its assets, one of the people said. The Information first reported the shuttering.
Zume did not respond to requests for comment.
Founded in 2015, the company was one of many attempting to use robots to make pizza. The concept never took off, and the technology was plagued by technical challenges, such as keeping melting cheese from sliding off while the pizzas baked in moving trucks.
In January 2020, the company cut over half its employees and switched to compostable packaging, based on the know-how of a southern California company it had acquired, Pivot Packaging.
Fallen Pizza Startup Zume Shuts Down After Raising Millions - Bloomberg (archive.ph) |
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| From: Glenn Petersen | 6/14/2023 6:21:30 AM | | | | | | Arm in talks with big clients about investing in IPO -sources
Reuters
June 13, 20233:05 PM CDT Updated 12 hours ago
June 12 (Reuters) - SoftBank Group Corp's (9984.T) Arm is in talks with some of its biggest customers and end users about bringing on one or more anchor investors in the chip designer's initial public offering (IPO), two sources familiar with the matter said.
Arm is talking to at least ten companies, including Intel Corp (INTC.O), Alphabet Inc (GOOGL.O), Apple Inc. (AAPL.O), Microsoft Corp. (MSFT.O), TSMC (2330.TW), and Samsung Electronics Co Ltd. (005930.KS), about their potential participation in the IPO, one of the sources said.
The talks are preliminary and any decision about an anchor investment in Arm's IPO won't come till August, the source added. The investment would not come with any board seat or control, according to the source.
Arm plans to sell its shares on Nasdaq later this year, seeking to raise $8 billion-$10 billion, Reuters reported earlier in April.
Arm's designs are used to manufacture chips made by most of the world's major semiconductor companies, including Intel, AMD (AMD.O), Nvidia (NVDA.O) and Qualcomm (QCOM.O). It was not immediately clear what impact any IPO investment by one or more of those companies would have on Arm's commercial relationships.
The chip designer had filed with regulators confidentially for a U.S. stock market listing in April, setting the stage for this year's largest IPO.
Arm and Intel declined a Reuters request for comment. Bloomberg News first reported on the cornerstone investment deliberations.
Alphabet, Apple, Microsoft, TSMC and Samsung didn't immediately respond to requests for comment.
Reporting by Anirban Sen and Echo Wang in New York and Yana Gaur in Bengaluru; Editing by Rashmi Aich, Dhanya Ann Thoppil and Edward Tobin
Arm in talks with big clients about investing in IPO -sources | Reuters |
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| To: Glenn Petersen who wrote (6005) | 6/21/2023 5:12:46 AM | | From: Glenn Petersen | | | | Masayoshi Son says SoftBank ready to go on ‘counteroffensive’
Billionaire chief talks up AI and reveals he had breakdown in October where he questioned his achievements as an entrepreneur
Kana Inagaki in Tokyo
2 HOURS AGO
Financial Times
SoftBank chief Masayoshi Son has said the company will go on the “counteroffensive” after nearly three years of asset sales and hoarding cash to resume the technology group’s investments in artificial intelligence.
In his first major presentation to investors since November, the 65-year-old founder of the Japanese conglomerate said he would devote the rest of his life to being “an architect for the future of humanity”.
“We have done enough being on the defensive,” Son said on Wednesday at the company’s annual shareholders’ meeting in Tokyo. “I feel that the timing for us to go on the counteroffensive is soon. I’m very excited.”
Following heavy losses incurred by SoftBank’s Vision Funds in recent years, the tech conglomerate halted new investments and used almost all of its shares in Chinese ecommerce group Alibaba for financing. As a result, the group is now sitting on more than ¥5tn ($35bn) in cash.
“I regret big mistakes,” Son said in response to a shareholder’s question on whether the Vision Funds’ investments were actually focused on artificial intelligence.
“But still, we made investments in roughly 500 companies...and I think at least I have found more than several that are going to be big successes out of the 500. I think that’s enough.”
In May, SoftBank’s chief financial officer Yoshimitsu Goto said the company would not miss opportunities to invest in new technology such as ChatGPT but cautioned that it was not ready to accelerate its deal activity following record annual investment losses of ¥5.3tn. Ahead of Son’s presentation, shares in SoftBank rose as much as 4 per cent. Investor sentiment has improved ahead of the blockbuster listing of its UK chip designer Arm in New York.
During the AGM, Son revealed he had a crisis in October where he broke down in tears for a few days and questioned how much he had achieved as an entrepreneur.
“I realised that what I really wanted to become was an architect, to design the future of humanity,” Son said. “I want to achieve several [of my inventions] one by one and Arm will provide the key. By using Arm’s position and combining it with my ideas, there will be an amazing opportunity.”
The SoftBank boss warned that companies would fall behind if they shunned the use of generative AI but also called for regulations to ensure the technology would not be misused.
“There is a risk of scarier consequences than the atomic bomb if [AI] is misused by the wrong people .?.?. so regulations should be debated and introduced,” he said.
Masayoshi Son says SoftBank ready to go on ‘counteroffensive’ | Financial Times (archive.ph) |
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| To: Glenn Petersen who wrote (6006) | 7/12/2023 5:18:22 AM | | From: Glenn Petersen | | | | Nvidia in talks to be an anchor investor in Arm IPO
World’s most valuable semiconductor group discusses acquiring stake in SoftBank-owned chip designer ahead of New York listing
Tabby Kinder in San Francisco, Qianer Liu in Hong Kong, Nicholas Megaw in New York, Kana Inagaki in Tokyo and Tim Bradshaw in London
Financial Times
3 HOURS AGO
Chip designer Arm is in talks to bring in Nvidia as an anchor investor, while the SoftBank-owned company presses ahead with plans for a New York listing as soon as September, several people briefed on the talks said.
Nvidia, the world’s most valuable semiconductor company, was forced last year to abandon its planned $66bn acquisition of Arm after the deal was challenged by regulators.
The Silicon Valley-based chipmaker is one of several existing Arm partners, including Intel, that the UK-based company is hoping will take a long-term stake at the initial public offering stage, according to the people.
The prospective investors are still negotiating with Arm over its valuation. One person familiar with the discussions said Nvidia wanted to come in at a share price that would put Arm’s total value at $35bn to $40bn, while Arm wants to be closer to $80bn.
The aim of bringing in large anchor investors as Arm launches an IPO in New York would be to help to support the stock as SoftBank, which bought Arm for £24bn ($32bn) in 2016, sells down its stake.
Many private tech companies and their advisers are watching closely to see if Arm can succeed in launching its IPO in 2023 after a year-long slump in new listings.
Securing the advance support of a few anchor investors is a popular tactic during difficult IPO markets, serving as a way to ensure demand and reassure other potential investors.
Arm and Nvidia declined to comment. A person close to the situation said the talks had not been concluded and might not lead to an investment.
Arm is expected to be the most valuable company to go public in the US since automaker Rivian, which listed with an initial market capitalisation of $70bn in late 2021.
It is widely considered to be a less risky prospect than many IPO candidates given its previous record as a public company.
People close to SoftBank said its founder Masayoshi Son has been personally involved in seeking anchor investors for Arm. Son has been focusing on expanding the chip designer’s revenue ahead of its IPO. SoftBank declined to comment.
Arm and Nvidia have contacted regulators in the US to smooth over any potential concerns about what is likely to be a small minority investment, in the low hundreds of millions of dollars, according to people close to the discussions.
When Nvidia first announced plans to take over Arm in September 2020, competition authorities in the US and Europe objected. They said the deal might restrict rivals’ access to Arm’s intellectual property, which can be found in the vast majority of smartphones and a growing portion of the automotive market, as well as give Nvidia access to competitively sensitive information.
Nvidia is already an Arm customer but its talks to invest in the company point to bigger ambitions to expand from its core business in “graphics processing units” — dedicated chips for accelerating specialised tasks, including 3D rendering and training artificial intelligence — into the “central processing units” that handle most other computing functions.
One person familiar with the plans said Arm was keen to bring in Nvidia in its bid as a way to position AI as central to the UK group’s growth plans. “AI will be every third word in the offering document,” the person said. “Nvidia is so important as its involvement implies AI.”
The move would bring Nvidia into closer competition with Intel, whose CPUs have long dominated the PC and data centre markets.
Nvidia, which became the first chipmaker to hit a $1tn valuation in May, recently produced its first CPU using Arm’s designs as part of a so-called superchip, dubbed Grace Hopper and designed for artificial intelligence and high-performance computing.
Global listing volumes plummeted last year as investors were put off by falling stock prices, rising market volatility and the uncertain economic outlook. However, activity has begun to pick up in recent weeks, thanks in part to a broader upswing in stock prices led by Nvidia.\
Additional reporting by Richard Waters
Nvidia in talks to be an anchor investor in Arm IPO | Financial Times (archive.ph)
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| From: Glenn Petersen | 8/2/2023 4:49:11 AM | | | | | | SoftBank’s Arm Targets $60 Billion-Plus Value for September IPO
-- Chip design firm may raise as much as $10 billion in debut
-- Nvidia, Intel are in discussions to be anchor investors
By Min Jeong Lee, Giles Turner, and Ian King
Bloombeerg
August 2, 2023 at 12:45 AM EDT
SoftBank Group Corp.’s semiconductor unit Arm Ltd. is targeting an initial public offering at a valuation of between $60 billion and $70 billion as soon as September, a sign of bullish interest in artificial-intelligence chips, according to people familiar with the matter.
The roadshow is scheduled to start the first week of September with pricing for the IPO the following week, said one of the people, asking not to be named because the talks are private. The latest target for Arm’s valuation underscores a shift in market mood in favor of technologies linked to generative AI and chips. Earlier this year, bankers were pitching a range of valuations for the chip designer from $30 billion to $70 billion, Bloomberg News has reported.
SoftBank, led by Masayoshi Son, and Arm Chief Executive Officer Rene Haas long considered the bottom of that range too low. Arm executives may still be gunning for a valuation of as high as $80 billion, but the odds of achieving such a target are uncertain, one of the people said. The chip company is looking to raise as much as $10 billion in the IPO, Bloomberg News has reported.
Arm has “had a hugely important but behind-the-scenes and not-very-well-understood role for a very long time,” said Bob O’Donnell, president of TECHnalysis Research. “There’s this raised awareness now of what Arm does and the role that it plays.”
Rene Haas, chief executive officer of Arm.Photographer: David Paul Morris/Bloomberg
-----------------------------------------
SoftBank and Arm declined to comment.
Arm made a confidential filing for a US listing in April. A handful of big industry names, including Nvidia Corp. and Intel Corp., have been engaged in preliminary talks to become anchor investors in the IPO, which could be the year’s biggest market debut.
Goldman Sachs Group Inc., JPMorgan Chase & Co., Barclays Plc and Mizuho Financial Group Inc. were named as IPO banks in the filing, Bloomberg News has reported.
While the Cambridge, UK-based company’s technology is used in almost every smartphone on the planet, its place in the industry has long been obscure. Arm sells the blueprints needed to design microprocessors, and licenses technology known as instruction sets that dictate how software programs communicate with those chips. The power efficiency of Arm’s technology helped make it ubiquitous on phones, where battery life is critical.
Haas, who took over as CEO last year, is now working to expand beyond the smartphone market, which has stagnated in recent years. He’s targeting more advanced computing, particularly the chips for data centers for cloud computing and artificial intelligence applications.
Processors for that market are among the most expensive — and profitable — in the industry. Amazon.com Inc. has adopted Arm-based chips for its Amazon Web Services because it says they are more efficient both in terms of energy and economics. They are used by 40,000 AWS customers.
Estimates for Arm’s value have fluctuated wildly in tandem with chip stocks since SoftBank acquired the company for $32 billion in 2016, de-listing it from the London Stock Exchange. SoftBank founder Son has regularly talked up the potential for Arm’s future growth and dominance in chip IP. In February last year, Son said he wants Arm’s debut to be “the biggest” in the history of the semiconductor industry.
A successful Arm IPO would mark a rare victory for SoftBank, which struggled after an ill-fated foray into startup investing. The company’s Vision Fund arm lost 6.9 trillion yen ($48 billion) in the last two fiscal years as the value of its holdings tumbled.
— With Edwin Chan
SoftBank’s Arm Targets $60 Billion-Plus Value for September IPO - Bloomberg (archive.ph) |
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| From: Glenn Petersen | 8/18/2023 2:32:52 PM | | | | | | SoftBank buys Vision Fund's stake in Arm at valuation of $64 bln-sources
By Anirban Sen
Rueters
August 18, 202311:39 AM CDT
Updated 2 hours ago
NEW YORK, Aug 18 (Reuters) - SoftBank Group Corp (9984.T) has acquired the 25% stake in Arm Ltd it does not directly own from its Vision Fund unit in a deal that values the chip designer at $64 billion, according to people familiar with the matter.
Details of the transaction will be unveiled on Monday when Arm makes public the filing for its blockbuster stock market launch, the sources said, requesting anonymity as these discussions are confidential.
SoftBank is now expected to sell fewer Arm shares in the initial public offering (IPO) and would likely be retaining a stake of as much as 90% in the company, according to the sources, adding that Arm's capital raising from the IPO would be less than the range of $8 billion to $10 billion it was earlier planning.
SoftBank is currently in talks to list Arm at a valuation of $60 billion to $70 billion in the IPO, which is expected to happen in September, Reuters has previously reported. SoftBank, which took Arm private for $32 billion in 2016, sold a 25% stake in the company to Vision Fund 1 (VF1) for $8 billion in 2017.
The deal removes a potential overhang for Arm's stock following the IPO, because VF1 had initially planned to cash out its stake in the stock market over time following the listing, while SoftBank has indicated it will remain a long-term strategic investor.
Reuters was first to report earlier in August that SoftBank was in talks to buy the stake from the Vision Fund. The Wall Street Journal reported the financial terms of the deal earlier on Friday.
The deal also delivers a major victory for VF1's biggest investors, including Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala. They nursed losses after many of SoftBank's bets on startups such as workspace provider WeWork Inc (WE.N) and ride-sharing firm Didi Global (92Sy.MU) soured.
Arm's plans to go public come as the U.S. IPO market shows early signs of a recovery after a barren spell that lasted a year and a half. Grocery delivery service Instacart and marketing automation firm Klaviyo Inc are also expected to go public in New York in September, the sources said.
Reporting by Anirban Sen in New York Additional reporting by Milana Vinn in New York and Stephen Nellis in San Francisco Editing by Chizu Nomiyama and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
SoftBank buys Vision Fund's stake in Arm at valuation of $64 bln-sources | Reuters |
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| To: Glenn Petersen who wrote (6009) | 8/21/2023 5:26:24 PM | | From: Glenn Petersen | | | | The Arm F-1: F-1 (sec.gov)
Arm files for Nasdaq listing, as SoftBank aims to sell shares in chipmaker it bought for $32 billion
PUBLISHED MON, AUG 21 20234:29 PM EDT
UPDATED 5 MIN AGO
Kif Leswing @KIFLESWING
Arjun Kharpal @ARJUNKHARPAL
CNBC.com
KEY POINTS
-- Arm, which is owned by SoftBank, filed on Monday to list on the Nasdaq.
-- The U.K.-based chipmaker is looking to go public during a historically slow period for U.S. IPOs.
-- SoftBank agreed to acquire Arm for $32 billion in 2016.
Arm, the chipmaker owned by Japan’s SoftBank, filed for a Nasdaq listing on Monday, positioning itself to go public during a historically slow period for tech IPOs.
The company wants to trade under the ticker symbol “ARM.”
Arm reported $524 million in net income on $2.68 billion in revenue in its fiscal 2023, which ended in March, according to the filing. Arm’s 2023 revenue was slightly down from the company’s 2022 sales of $2.7 billion.
The U.K.-based company filed confidentially for a listing in the U.S. earlier this year after previously announcing it would go public in the U.S. over the U.K., dealing a blow to the London Stock Exchange.
Arm is one of the most important chip companies. It sells licenses to an instruction set at the heart of nearly every mobile chip, and increasingly, PC and server chips as well. In recent years, it has aimed to sell more complete chip designs, which is more lucrative.
ARM chips are made by companies including Amazon, Alphabet, AMD, Intel, Nvidia, Qualcomm, and Samsung, according to the filing. Its technology is also included in Apple’s chips for iPhones. Arm said that its technology was included in over 30 billion chips shipped in its fiscal 2023. Arm typically takes a fee on every chip that is shipped using its technology.
SoftBank originally sought to sell Arm to chip giant Nvidia, but the deal faced major pushback from regulators, who raised concerns over competition and national security. SoftBank took Arm private in 2016 in a deal valued at $32 billion.
Arm did not provide a projected share price, so it’s not yet possible to estimate its valuation.
A critical component
Arm, with just under 6000 employees, plays a pivotal role in the world of consumer electronics, designing the architecture of chips that are found in 99% of all smartphones, making it a key provider of technology to Apple, Google and Qualcomm.
The company was founded in 1990 as a joint venture between several companies and Apple to create a low-power processor for battery-powered devices. It first went public in 1998, before being taken private in 2016 by SoftBank.
But the company is also facing headwinds from a slowdown in demand for products like smartphones, which has hit chip firms across the board. Arm’s net sales fell 4.6% year-on-year in the second quarter, while the unit swung to a loss, according to SoftBank’s earnings release. SoftBanks’ beleaguered Vision Fund, meanwhile, has racked up billions of dollars in losses of late due to tech bets that soured in a high interest rate environment.
In its filing, Arm made the case that its technology would be essential for AI applications, although it focuses on central processors, not the graphics processors that are required for creating big AI models. “The CPU is vital in all AI systems, whether it is handling the AI workload entirely or in combination with a co-processor, such as a GPU or an NPU,” Arm said in the filing.
Arm identified x86, the instruction set used in Intel and AMD processors, as well as RISC-V, an open source instruction set backed by several big tech companies, as sources of competition.
Arm is poised to hit the market at a time when investors are flocking to next-generation semiconductors because of the demand spurred by artificial intelligence, most notably the soaring popularity of generative AI applications. Nvidia, the chipmaker most at the heart of the generative AI boom, has seen its stock price triple this year.
However, the tech IPO market has been largely dormant for the past 20 months, with no notable venture-backed deals since Dec. 2021. Last October, Intel spun out self-driving car technology company Mobileye. That stock is up just 17% since its first day close.
Some tech investors may be looking to ARM’s offering as an indication of demand for new offerings. Grocery delivery company Instacart is among late-stage startups that are reportedly preparing to submit IPO paperwork to the SEC.
Arm files for Nasdaq listing, as SoftBank sells shares in chipmaker (cnbc.com) |
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