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Following Arm’s success this week, Instacart raised the price range for its initial public offering, the latest sign that the U.S. market for new listings is picking up.
The online grocery delivery company raised its stock price range by about 7% to $28 to $30 per share in a filing on Friday, valuing the group at as much as $10 billion on a fully diluted basis.
San Francisco-based Instacart’s upgrade comes a day after British chip designer Arm’s shares rose 25% on its first day of trading on the Nasdaq exchange.
Previously, Instacart’s acquisition target was US$26 to US$28 per share, equivalent to a valuation of approximately US$9.3 billion for the company. Ultimately, this will raise $660 million, compared with the previous target of $616 million.
However, even after raising the range, the company is still valued at about a quarter of its private valuation two years ago.
Arm’s IPO, the largest U.S. listing in nearly two years, raised nearly $5 billion for SoftBank, the Japanese conglomerate that bought the Cambridge-based semiconductor company in 2016 for $32 billion.
Based on Thursday’s closing price, Arm’s outstanding stock market value was $65.2 billion, or nearly $68 billion on a fully diluted basis.
That valuation is higher than the $64 billion it paid last month to buy out the remaining shares it didn’t already own in Arm from the Vision Fund, the $100 billion Saudi-backed fund managed by SoftBank itself.
Investor demand for Arm shares has fueled optimism about a recovery in the U.S. IPO market after a dearth of such deals this year. In addition to Instacart, marketing software group Klaviyo and sandal maker Birkenstock are also expected to test investor interest in their shares in the coming weeks.
Arm’s listing benefits from its sheer size and previous history as a public company. By contrast, Instacart and Klaviyo will be viewed as litmus tests for how public markets will embrace the venture capital-backed tech companies that until recently dominated the IPO market. Tech startups have faced a sharp slowdown in funding and plummeting valuations over the past year.
Instacart plans to sell some shares to retail investors, with investment platform SoFi serving as an underwriter for its first mainstream IPO.
Several bankers involved in the Arm deal said they had been cautious in setting pricing terms to ensure the deal went smoothly, given its importance to the broader IPO market. A person close to Instacart said the company is similarly cautious about its initial price range, but said they are encouraged by Arm’s popularity.
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