UK Loses Race, Arm Confirms Single US Listing To Tap Its Investor Base And Attractive Valuation, Bankers Pitch $30B-$70B Valuation

U.K. chip designer Arm Ltd prepared for a single U.S. public listing, dumping calls from the U.K. government for dual listing in its home market. 

Global investment banks are pitching a drowsy range of valuations for the chip designer, from $30 billion - $70 billion. The current range puts the median value of the deal at around $50 billion, a target that multiple bankers touted.

The parent company Softbank Group Corp SFTBF SFTBY-owned had been seeking a $60 billion valuation in 2022, Bloomberg reports.

The wide range underlines the challenges of valuing the firm against volatile semiconductor equity prices and bankers' efforts to impress a potential client for the most coveted IPO deal in years. 

SoftBank looks to appoint banks to lead the transaction among Goldman Sachs Group, Inc GS, JP Morgan Chase & Co JPM, and Barclays PLC BCS. It seeks to price the IPO at the end of the summer and then complete the offering later this year.

Arm proposed retaining its headquarters in Cambridge, England, and may consider a secondary listing in London.

After several months of talking with the British government and Financial Conduct Authority, "SoftBank and Arm has determined that pursuing a U.S.-only listing of Arm in 2023 is the best path forward for the company and its stakeholders," Arm CEO Rene Haas stated, Bloomberg reports.

Arm's technology is found in most smartphones and is becoming more pervasive across the electronics industry. Tokyo-based SoftBank spent $32 billion to buy the business in 2016.

U.K. Prime Minister Rishi Sunak had pushed the company to list on the London Stock Exchange. But Masayoshi Son, SoftBank's founder, has opted for a deeper investor base in the U.S. and more attractive valuations. However, Arm proposed adding a new site in Bristol in the southwest of England to help it add to its headcount.

Reportedly, China resisted Arm's plan to offload its troubled joint venture in the country.

Beijing was determined to keep Arm as the unit's largest shareholder as the U.S. tried to cut off China's access to cutting-edge semiconductor technology. 

Official and current corporate records in China show Arm retains its 47.33% stake in Arm China. Uncertainty about the transaction's status could hinder Arm's public listing ambitions.

Price Action: SFTBY shares closed lower by 0.59% at $20.12 on Thursday.

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