Arm, a prominent chip design company under the umbrella of Softbank Group, initially planned for a September IPO on the New York Stock Exchange, aiming to raise $10 billion, according to a Reuters report. As negotiations progress, Nvidia is being considered as the leading investor in Arm.
An anchor investor plays a crucial role in a particular investment case, expressing a clear intent to invest before a securities company's roadshow, and signing a contract on the first day. While negotiations are in their early stages, it is said that aside from the capital injection from an investor, Arm does not plan to engage in any other commercial agreements.
The Financial Times suggests that Nvidia's participation could result in a minority investment amounting to "hundreds of millions of dollars." However, both Nvidia and Arm have not yet come to a consensus on valuation. Nvidia seeks to value Arm between $35 billion and $40 billion, the latter figure being the price when Nvidia's acquisition failed.
Arm's ability to secure funds through an IPO is of great significance to SoftBank Group. In 2016, SoftBank acquired Arm for $32 billion, marking the beginning of the Vision Fund. However, the fund has faced losses in recent years. In 2020, SoftBank planned to sell Arm to Nvidia for $40 billion, but the deal was hindered due to regulatory approval issues, as Arm is the world's largest smartphone chip IP design provider.
The Vision Fund's investment income has further deteriorated in 2022 due to the global decline in technology stocks and the depreciation of the yen. Consequently, SoftBank Group, which recorded its largest single-quarter loss ever, faces a high demand for liquidity and has been extensively selling various assets. Arm currently accounts for 16% of SoftBank Group's largest equity investment after selling 9% of Alibaba stocks for $34.5 billion last year.
A successful Arm IPO would significantly improve the finances of both SoftBank Group and the Vision Fund. As a result, SoftBank Group has focused on pushing Arm's listing plans forward and submitted an IPO application to US regulatory authorities in April.
It's worth noting that Nvidia is just one of several potential investors, with SoftBank Group in talks with at least ten others including Intel, Alphabet (Google's parent company), and TSMC. SoftBank founder, Masayoshi Son, is personally involved in securing anchor investors for Arm.
Neither Nvidia nor Arm have commented on the situation at this time.