Son is determined to turn the tide.
His record on technology investing took a hit after SoftBank Group Corp.’s Vision Fund lost $32 billion in a year as companies including WeWork and DoorDash Inc. shut down. So as he and other executives meet with bankers to plot this week’s initial public offering, Arm Holdings Plc’s focus is on making sure the sale goes smoothly.
They don’t want buyers to pull out at the last minute, they fear valuation headwinds, and most importantly, they want to set a price that all but guarantees the stock will rise on its first day of trading.
By that measure, the IPO was a resounding success. The company raised $4.87 billion in its initial public offering on Thursday, becoming the largest U.S. IPO in nearly two years, and its shares rose 25% in its initial public offering on Thursday.After bringing the company to market in recent years, we have seen Stock price plummets 50%, 60% or 70% over the next few months, that’s a win. Arm’s gains continued on Friday, rising 11% in pre-market trading.
But while the listing from Midtown Manhattan to Tokyo was greeted with enthusiasm and congratulations, it also showed the shortcomings of caution. The company still has many unanswered questions: If the IPO were priced at $1 per share—an idea Son has rejected—it could raise about $100 million more. In the extreme case, if the shares were sold at the first-day settlement price, the total value would increase by more than $1 billion.
By the end of the day, the value of SoftBank’s Arm stake had increased by about $12 billion as the share price rose, offsetting the missed opportunity.
SoftBank took an unusual approach to marketing the sale. According to people familiar with the matter, the company did not appoint a lead underwriter, but let Arm CEO Rene Haas (Rene Haas) and Chief Financial Officer Jason Child (Jason Child), two experienced operating Business) talked a lot with investors at road shows.
SoftBank billionaire founder and CEO Masayoshi Son was involved in pricing talks Wednesday afternoon, Bloomberg reported report. On the conference call, he said he didn’t want to charge too high a price, even if it meant leaving a little money on the table.
This was an unconventional choice given that the issue was oversubscribed 12 times, indicating strong demand.
But after a series of horrific IPO failures including SoftBank’s domestic IPO, Son needed a victory. Telecommunications businessThe company fell more than 14% on its first day of trading in 2018. To be fair, it’s been a tough market for everyone after the post-pandemic tech rally collapsed on rising interest rates and shrinking valuations. However, the son was hit particularly hard. SenseTime has fallen 62% since its listing, while Didi Chuxing’s market value has also shrunk by three-quarters. The list goes on.
Bankers involved in the Arm deal believe they have broken that record.
Tom Swerling, global head of equity capital markets at Barclays Plc, one of the four banks leading the IPO, said: “The way to think about Arm is that we have a unique asset that is continually improving. Excellent trading results were achieved in the market environment.”, said in an interview.
Technology elite
SoftBank strictly controlled the number of shares to ensure demand, and ultimately issued only 10% of the company’s shares. SoftBank has also used its extensive influence in Silicon Valley to raise more than $700 million from some of the world’s largest technology investors, including Apple Inc., Nvidia Corp., Intel Corp., Samsung Electronics Co. and others.
The IPO attracted a broad range of investors, said the people, who asked not to be identified discussing confidential data. The top 10 investors receive 50% of the shares, while the top 25 investors receive approximately 70%. They said there were more than 650 investors in the deal.
Representatives for Arm and SoftBank declined to comment.
The pricing meeting, which Son called into, was held at the offices of Lane Securities in Manhattan. People familiar with the matter said that Raine was a financial advisor for the listing, SoftBank was one of its investors, and Raine’s co-founder and Son’s friend Jeff Sine was also present. Officials from Barclays and other lead underwriters Goldman Sachs Group Inc., JPMorgan Chase & Co. and Mizuho Financial Group Inc. also attended.
During the meeting, a Wall Street Journal headline called pricing at $52 a share, surprising bankers and executives who ultimately settled for $51.
graduation ceremony, coming of age ceremony
Once the price was agreed upon, bankers clapped and congratulated the team, and some underwriters went out to celebrate.
“Judging from how people feel about the day, it’s a wedding, a graduation and a bar mitzvah all rolled into one,” Haas said in an interview.
The deal has been in the works since last year, when Arm’s $40 billion deal to sell itself to Nvidia was called off, the CEO added. Slow markets give companies more time to develop plans.
“In terms of where our aircraft landed, relative to where we thought it would land six to nine months ago, we landed in a great place,” he said.
Although Arm is now a public company, it will still answer to SoftBank, the largest investor with a 90% stake.
However, the son has moved on to other things. Even before trading opened on Thursday, Haas said Son was texting him about business matters unrelated to the IPO.
“He and I are on the same page about long-term thinking,” Haas said.
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