Nvidia in talks for Anchor Chip Designer Arm IPO, says FT

(Bloomberg) — Arm Ltd., the SoftBank Group Corp.-backed chip designer, is in talks with Nvidia Corp. to join a group of potential investors to anchor its initial public offering, according to the Financial Times.

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Nvidia, a longtime partner and Arm customer, is looking to invest at a valuation of $35 billion to $40 billion, the newspaper said, citing unidentified people briefed on the talks. That compares to a valuation closer to $80 billion that SoftBank wants, he said.

Bloomberg reported earlier that Arm was in talks with potential strategic investors, including Nvidia competitor Intel Corp., to participate in the biggest IPO of the year.

Bringing in anchor investors can help build interest and momentum for an IPO, especially given the high valuation SoftBank is seeking. Arm’s success is essential for the Tokyo-based investment firm – which bought Arm for $32 billion in 2016 – to regain its footing after losing billions of dollars in seed investment.

Read more: Arm Chief launches Chip Designer as AI plays in the build-up to IPO

SoftBank decided to take Arm public after Nvidia pulled out of a proposed $40 billion deal last year to acquire the chip designer. The plan, which was proposed in 2020, fell apart in the face of opposition from Arm customers and a lawsuit by the US Federal Trade Commission.

SoftBank founder Masayoshi Son said he hopes Arm’s IPO could be the largest ever by a chip company. Arm’s valuation has still not been set and the company could be valued between $30 billion and $70 billion, Bloomberg News previously reported.

SoftBank shares erased earlier losses and rose more than 2% in Tokyo on Wednesday.

Arm is seeking to raise up to $10 billion in a New York listing later this year, after rejecting calls from British prime ministers to return to London, where it was once traded.

The company’s technology is found in most smartphones around the world and is ubiquitous in the electronics industry. SoftBank executives offered high valuations for the chip designer by pitching it as an AI game with technology supporting AI infrastructure.

Anchor investors buying $100-200 million worth of stocks are increasingly popular for semiconductor-related IPOs. Last year, private equity firm General Atlantic invested about $100 million in the IPO of Intel-backed Mobileye Global Inc., while Qualcomm Inc. backed the listing of GlobalFoundries Inc. in 2021.

–With help from Jake Rudnitsky.

(Updates with details of failed acquisition in fifth paragraph)

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