Bankers set for fees bonanza as Arm eyes £40bn valuation ahead of New York float

Arm will float on the New York stock market next week with a valuation of more than £40billion as bankers working on the blockbuster deal prepare to line their pockets.

In an updated filing yesterday, shares in the British chip designer were priced between $47 and $51 a piece, meaning it will be worth as much as £42billion.

The Cambridge-based firm, owned by Japanese conglomerate SoftBank, hopes to raise up to £4billion of new funds from investors through the listing, the regulatory documents showed.

Those already committed to buy shares include Apple, Google, Nvidia, Samsung, Intel and TSMC.

Chipmakers AMD and MediaTek, as well as Cadence and Synopsys, were named for the first time. 

Shares in British chip designer Arm are priced between $47 and $51 a piece, meaning it will be worth as much as £42bn

Qualcomm, one of the world’s largest mobile chipmakers and an important Arm customer, was not listed among the backers, at a time when the two companies are locked in litigation.

The float price will come as a disappointment for many investors.

SoftBank executives were hoping for a valuation of up to £56billion but the target was lowered after fund managers expressed scepticism over Arm’s flat revenues and falling profits in the run-up to the listing.

SoftBank will own 90.6 per cent of the company following the float, which is expected to take place towards the end of next week.

But the price still makes Arm the most valuable company to list in New York since the £56billion debut of electric car maker Rivian Automotive in 2021. 

Investment banks on the float are set to share more than £80million in fees from the listing.

Arms is poised to pay the banks 2 per cent of the £4billion it is seeking to raise from the listing.

According to sources close to the deal, the fee pool would consist of a 1.75 per cent base fee and a 0.25 per cent incentive fee awarded at the firm’s discretion.

The banks leading the offering are Barclays, Goldman Sachs, JP Morgan and Mizuho Financial. A total of 28 banks are working on the deal.

SoftBank bought Arm for £24billion in 2016, tearing it away from the London Stock Exchange. The Japanese giant hoped to sell it to US chip firm Nvidia but a £52billion deal collapsed in 2022 due to regulatory obstacles. 

Government ministers then lobbied SoftBank for Arm shares to be listed in London as well as New York, but the City lost out as New York has become popular with tech entrepreneurs.

Oxford-based electric vehicle manufacturer Arrival was given a £10.6billion valuation on the Nasdaq in 2021.

The world’s largest building materials company CRH also warned it would move its primary stock market listing from London to the US.

And gambling giant Flutter is also planning an autumn New York listing.

British life-sciences company Abcam, already listed in New York, was snapped up by US medical giant Danaher in a £4.5billion deal last week.

This post first appeared on Dailymail.co.uk