SoftBank Nears Deal to Acquire Vision Fund’s Arm Stake Ahead of IPO

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SoftBank Group Corp is reportedly in discussions to acquire the remaining 25% stake in Arm Ltd, a leading chip designer, from Vision Fund 1 (VF1), a $100 billion investment fund raised in 2017. This move could provide investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala, with long-awaited returns. The talks coincide with SoftBank’s plans to list Arm on Nasdaq next month with a valuation between $60 billion and $70 billion.

Currently owning 75% of Arm, SoftBank’s acquisition of VF1’s stake could deliver a significant and immediate financial gain to VF1 investors, in contrast to selling Arm shares in the stock market post-IPO, which would carry higher risk and a longer timeline. This potential deal aligns with SoftBank’s efforts to reduce its exposure to risky startups and instead focus on more stable and profitable ventures.

The success of this acquisition could improve SoftBank’s prospects for attracting capital from VF1 investors in the future. While SoftBank is not currently planning to tap into VF1’s capital for its Vision Fund 2 (VF2), a successful transaction could positively impact the company’s reputation among investors.

To ensure impartial decision-making, SoftBank’s CEO Masayoshi Son has recused himself from VF1’s deliberations. Investment committees from VF1 and SoftBank’s investment advisory board are leading the negotiations. Although the exact valuation of Arm’s stake is undisclosed, this potential deal could lead SoftBank to retain an 85% to 90% stake in Arm after the IPO.

Both SoftBank and Arm declined to comment on the matter. Arm’s IPO would not only benefit VF1 but also provide a boost for SoftBank, which has recently faced declines in the valuations of its major holdings. SoftBank’s plans to go public with Arm follows the collapse of a deal to sell the company to Nvidia Corp for $40 billion. Arm’s IPO preparations come as the U.S. IPO market sees a resurgence, and Arm’s business model, centered on licensing designs rather than manufacturing processing systems, could position it well for success.