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Arm, the chip designer, is in discussions with Nvidia, the world’s most valuable semiconductor company, to bring them in as an anchor investor. Arm is preparing for an IPO in New York, possibly in September. Last year, Nvidia’s attempt to acquire Arm for $66 billion was met with regulatory challenges. Arm is hoping to secure long-term stakeholders during the IPO stage, including existing partners like Intel. The negotiations are ongoing, with Nvidia proposing a valuation of $35-40 billion and Arm aiming for $80 billion.
The inclusion of large anchor investors in Arm’s IPO aims to provide support for the stock as SoftBank, who acquired Arm for £24 billion ($32 billion) in 2016, sells a portion of its stake. This IPO will be closely watched by the tech industry after a year of declining new listings. Anchoring investors early on is a common strategy during challenging IPO markets, serving to ensure demand and reassure other potential investors. Both Arm and Nvidia declined to comment on the ongoing talks.
Arm is expected to become the most valuable company to go public in the US since automaker Rivian, which had an initial market capitalization of $70 billion in late 2021. Given Arm’s previous record as a public company, it is considered a less risky option compared to other IPO candidates. Masayoshi Son, the founder of SoftBank, has been actively seeking anchor investors for Arm, focusing on expanding the chip designer’s revenue ahead of the IPO. Nvidia and Arm have engaged with regulators to address any concerns regarding the potential investment’s impact.
Nvidia, already an Arm customer, has ambitions to expand beyond its core business in graphics processing units (GPUs) and venture into central processing units (CPUs). Their talks with Arm about investment reflect this strategy. Nvidia made history by becoming the first chipmaker to reach a $1 trillion valuation in May. The listing volumes have seen a recent increase due to a general upswing in stock prices, led by Nvidia’s success. Additional reporting by Richard Waters.
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