Arm shares soar in blockbuster New York debut: UK Chip designer valued at more than £50bn
Shares in Arm rose on their New York debut yesterday, valuing the British chip designer at more than £50 billion.
In one of the most hotly anticipated stock market moves in recent years, shares rose some 25 percent from $51 to $63.59, valuing Arm at $65.2 billion, or £52.6 billion, in a blockbuster return to the public markets.
“Arm started with a bang,” said Ben Barringer, equity research analyst at asset management firm Quilter Cheviot.
The listing was closely watched for signs of a revival of investor interest in so-called initial public offerings (IPOs) – where companies float their shares on the stock market – after months of being in the doldrums.
There were fears that Arm’s exposure to China could weigh on the shares.
Arm race: Staff led by Rene Haas (white shirt) at the listing. The chip designer’s shares soared on its debut, valuing the British company at more than £50 billion
“The Arm IPO is the most hyped listing we’ve had in a while,” said Kyle Rodda, senior market analyst at brokerage firm Capital.com.
“It will also be an important test of risk appetite and whether these fast-growing, speculative companies still attract interest in a new world of higher interest rates.”
The IPO was reportedly 12 times oversubscribed and there was huge demand for shares prior to the listing, including from cornerstone investors such as Apple, Nvidia, Samsung and Google.
It raised £4 billion for Japanese owner SoftBank – which has retained a 90 per cent stake in the company – in the biggest New York exchange since electric carmaker Rivian listed in 2021.
The Cambridge-based company’s decision to move into New York came as a blow to the City of London.
Before Arm was bought by SoftBank for £24 billion in 2016, it was a member of the FTSE 100 index and had a secondary listing in New York.
When SoftBank’s proposed sale of Arm to Nvidia was thwarted by regulators, Britain lobbied hard for a return to the London stock market.
But SoftBank CEO Masayoshi Son chose New York.
“The fuss surrounding the New York launch will add to the disappointment that London has been avoided, even though the decision was announced back in March,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
However, Arm co-founder Hermann Hauser suggested there is still a chance of a secondary listing in London.
The venture capitalist, who helped set up Arm in 1990, said: ‘I very much hope there will be a secondary listing in London. Britain is still Europe’s leading technology country.’
Arm chief executive Rene Haas said yesterday it had been “a long road with many twists and turns that we never expected or anticipated, but we have come through it as a stronger and more resilient company.”
In documents published last month, Arm revealed it is “particularly sensitive to economic and political risks” in China, where it earns almost a quarter of its revenue.
In a 330-page document outlining his plans, Arm used more than 3,500 words, detailing how growing tensions between the Biden administration in the US and Beijing were already hampering its performance.
The success of the IPO in the coming weeks and months will be seen as a barometer for the IPO market after a slow year.
However, no major launches are planned for London in 2023.
Instacart, the US food delivery company, is targeting a valuation of £7.5 billion when it floats in New York next week, and sandal maker Birkenstock this week announced its intention to list on Wall Street, putting the company at up to £ 6 billion could value.