Shares in Arm soared on their debut in New York yesterday – valuing the British chip designer at more than £50billion.
In one of the most eagerly-anticipated stock market floats of recent years, the shares jumped some 25 per cent from $51 to $63.59 giving Arm a value of $65.2billion, or £52.6billion, in a blockbuster return to the public markets.
‘Arm has started with a bang,’ said Ben Barringer, an equity research analyst at investment management firm Quilter Cheviot.
The listing was closely watched for signs of a revival in investor interest in so-called initial public offerings (IPOs) – when firms float their shares on the stock market – after months in the doldrums.
It was feared Arm’s exposure to China could weigh on shares.
Arm race: Staff led by Rene Haas (white shirt) at listing. The chip designer’s shares took off on its debut– valuing the British firm at more than £50bn
‘The Arm IPO is the most hyped listing we’ve had in the markets for a while,’ said Kyle Rodda, senior market analyst at brokerage firm Capital.com.
‘It will also be a major test of risk appetite and whether these high-growth, speculative companies still attract interest in a new world of higher interest rates.’
The IPO was reportedly 12 times oversubscribed with huge demand for shares ahead of the listing, including from cornerstone investors such as Apple, Nvidia, Samsung and Google.
It raised £4billion for Japanese owner SoftBank – which has retained a 90 per cent stake in the firm – in the biggest New York float since electric car manufacturer Rivian listed in 2021.
The Cambridge-based company’s decision to float in New York came as a blow for the City of London.
Before Arm was bought by SoftBank for £24billion in 2016, it was a member of the FTSE 100 index and had a secondary listing in New York.
Once SoftBank’s proposed sale of Arm to Nvidia was scuppered by regulators, Britain lobbied hard for it to return to the stock market in London.
But SoftBank chief Masayoshi Son opted for New York.
‘The fanfare surrounding the launch in New York will cement disappointment that London has been shunned, 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. The UK is still the leading tech country in Europe.’
Arm chief executive Rene Haas yesterday said it had been ‘a long road with lots of twists and turns we never anticipated nor expected, but we came through as a stronger and more resilient company’.
In documents published last month, Arm revealed it was ‘particularly susceptible to economic and political risks’ in China, where it rakes in nearly a quarter of its revenues.
In a 330-page document outlining its plans, Arm took more than 3,500 words detailing how the growing tensions between the Biden administration in the US and Beijing were already hampering its performance.
The success or otherwise of the float in the coming weeks and months will be seen as a barometer for the IPO market after a sluggish year.
However, there are no major launches planned for London in 2023.
Instacart, the US delivery firm, is targeting a £7.5billion valuation when it floats in New York next week and sandal manufacturer Birkenstock this week announced its intention to list on Wall Street, which could value the firm at up to £6billion.