British chip designer Arm sets £40bn Wall St debut
British chip designer Arm will begin trading on Wall Street today in what is expected to be the biggest US public listing of the year.
The semiconductor firm has received enough support from investors to reach the top end of its £37.60 to £40.80 per share price range, which would value Arm at more than £40 billion.
Just 10 percent of the Cambridge-based company’s shares are to begin trading in New York today, raising about £4 billion for Japanese owner SoftBank, which will retain a 90 percent stake.
The company reportedly closed its order book early on Tuesday, indicating strong demand for the shares, the majority of which came from institutional investors and tech giants like Apple, Nvidia, Google, Intel and Samsung Electronics.
According to Reuters, marketing efforts for the initial public offering have been targeted at institutional investors, allowing retail savers to buy shares at potentially higher prices once they begin trading.
Float: Arm has received enough support from investors to reach the top end of its £37.60 to £40.80 per share price range, which would value Arm at more than £40bn
Susannah Streeter, head of markets at Hargreaves Lansdown, said: ‘UK investors will get the first opportunity to buy a share of a company when the company begins trading on the NYSE and so they should be prepared for the volatility that can often impact. Stock after its launch in the stock market.
‘Retail investors hoping for a front seat on Arm’s journey forward should keep in mind that it is difficult to picture the future AI landscape.’
Arm’s core business is designing chips for smartphones – it has a 99 percent share of the mobile phone market – and it is hoping to expand its reach into cloud computing and artificial intelligence.
The British company’s decision to list in the US was a blow to the London Stock Exchange.
The company was founded in Cambridge in 1990 and was part of the FTSE 100 when it was publicly listed in London and New York between 1998 and 2016, before being taken private by SoftBank.
The Japanese investor had planned to sell Arm to rival US chip firm Nvidia in 2020, but the £31 billion deal fell apart due to regulatory hurdles.
After the deal failed, UK politicians lobbied SoftBank for a dual listing on the London as well as the New York Stock Exchange. But SoftBank ignored the city in March, saying New York was ‘the best path forward’.
US listings have become increasingly popular among tech entrepreneurs, allowing them to reach higher valuations.
Streeter added: ‘Arm used to be seen as a British success story, but owner SoftBank is not making any sentimental moves here and wants the best bang for its buck.’
The City suffered another blow on Tuesday when packaging giant Smurfit Kappa said it would move its premium listing from London to New York as part of a merger with US firm WestRock, meaning it would leave the FTSE 100 index.
Building supplier CRH has also announced plans to move its primary listings to New York later this month and plumbing supplier Ferguson moved its listings to the US last year.