Lining up a bountiful selection of underwriters and cornerstone investors for an initial public offering is no guarantee of success. Just ask Arm. On Tuesday, the SoftBank-owned chip designer unveiled the target price range and valuation for its eagerly awaited IPO. Despite a consortium of 28 banks working as cheerleaders on the deal, the price will disappoint its owner.
Arm seeks to sell shares at between $47 and $51 a share. At the top of the range, it would raise $4.9bn, valuing the UK-based company at $52bn. Arm will be this year’s biggest IPO. But the bar is set low. The valuation is a steep reduction on the $64bn figure SoftBank applied in an internal transaction less than a month ago.
Dealmakers have been known to start roadshows with a conservative price range that can be driven up via effective marketing. Arm’s valuation could change between now and final pricing next Wednesday. SoftBank retains about 90 per cent of the shares, and can still benefit from any gain in the shares post listing.