Sunday, May 19, 2024
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SoftBank completed a full takeover of British chipmaker Arm, with plans to take it public as soon as next month. In the wake of the news, according to a new report from the Financial Times, tech’s largest private players are again mulling their own options to cash in on a potential new wave of IPO fever.

This year’s weak IPO environment has been well-documented — with debuts like Mediterranean lunch chain Cava and direct-to-consumer makeup seller Oddity marking a few of the major highlights. But given Arm’s station in the tech hardware world, its debut could jolt the market by setting a useful benchmark. Its path to even get to the public market has been convoluted, to say the least.

When it acquired the chipmaker for around $32 billion in 2016, SoftBank took the company private following a nearly two-decade-long public market stint. A year later, the Japanese conglomerate sold a quarter of the company to its own Vision Fund — the $100 billion investment vehicle managed by SoftBank and largely backed by Saudi Arabia’s gigantic sovereign wealth fund. Friday’s transaction saw that outlying 25% stake reacquired by SoftBank’s corporate office for $16 billion, roughly double its value from the 2017 sale, in a deal that valued Arm at $64 billion. With the Saudis cashed out, the road has cleared for SoftBank founder Masayoshi Son to list Arm shares on the Nasdaq, with initial paperwork expected to be filed as soon as Monday, sources told The Wall Street Journal. The rest of Silicon Valley can’t look away:

  • SoftBank is in talks to list Arm at a valuation of $60 billion to $70 billion, sources told Reuters. It would mark the first major VC-backed tech IPO since freemium software provider HashiCorp debuted in November 2021, which concluded a tech IPO hot streak starring the likes of Bumble and Affirm.
  • According to the FT, Instacart is seriously considering an IPO before the end of the year, after scrapping plans a year ago. Marketing automation startup Klaviyo could list as soon as September, sources told Reuters, while software company Databricks and digital ID verification platform Socure is flirting with listings as well.

Keeping Score: Arm’s valuation double-up and potential debut provide a much-needed win for SoftBank. Its Vision Fund laid off dozens of workers last year, after being mired in a series of bad bets including WeWork (gulp) and FTX (double gulp). A word to the wise: If your massive investment fund is betting on startups that end up mired in controversy and destined for a prestige TV miniseries, you may be doing something wrong. Once is an oopsie, twice is a trend.

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