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SoftBank Gains Support from Tech Giants for Arm IPO

SoftBank Group Corp. is enlisting some of Arm Ltd.'s biggest customers, including Apple, Nvidia, Intel, and Samsung, as strategic investors for the chip company's upcoming initial public offering (IPO), according to sources familiar with the matter. Other investors include Advanced Micro Devices, Cadence Design Systems, Google, Synopsys, and more. SoftBank has been in discussions with Arm customers and partners for several months, and plans are now being finalized. These plans may change closer to the IPO, which is expected to begin its investor roadshow next week.

The strategic investors will contribute amounts ranging from $25 million to $100 million. Their support will help reinforce the offering, which aims to raise between $5 billion and $7 billion. SoftBank, which acquired Arm in 2016, originally projected a valuation of $60 billion to $70 billion for its chip business. However, sources indicate that the figure may now fall within the range of $50 billion to $60 billion.

The IPO is expected to price Arm shares on September 13th, with trading beginning the following day. SoftBank will reportedly seek $47 to $51 per share, valuing Arm at $50 billion to $54 billion. Representatives from the companies involved declined to comment or did not respond to requests for comment.

SoftBank's decision to capitalize on investor interest in the chip industry comes at a time when spending on artificial intelligence equipment is driving growth. The Philadelphia Stock Exchange Semiconductor Index has rallied this year, outperforming other major indexes. Arm is a key provider of chip designs and technology licenses, playing a critical role in over 1 billion smartphones sold yearly. The company has also been expanding into new territories such as data center computers, targeting higher-priced electronic components.

For SoftBank CEO Masayoshi Son, a successful debut by Arm could help recover losses incurred by the Vision Fund, which reported a record $30 billion loss last year. Furthermore, a successful IPO could inspire a wave of IPO plans from other companies, including Instacart, Klaviyo, and Birkenstock, who are already working on their own offerings.

Arm's IPO has attracted a multitude of underwriters, such as Barclays, Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group, reflecting the company's wide-reaching influence and banks' eagerness to secure roles in significant deals.

Sources:
– Source article: Bloomberg, September 4, 2020, by Mark Gurman, Davey Alba, and Ellie Harmsworth

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