Arm Holdings returns to stock market with spectacular IPO valued at over $60 Billion

In a resounding return to the stock market, Arm Holdings, the UK-based chip designer, witnessed a remarkable surge in investor interest, propelling its market valuation beyond the $60 billion mark (£48.3 billion).

This noteworthy event marked the culmination of the largest initial public offering (IPO) of the year, raising an impressive $4.87 billion for its owner, SoftBank Group.

Arm's shares concluded Thursday's trading session at a staggering $63 each, reflecting an astonishing climb of nearly 25 per cent from their initial price of $51 per share during the IPO. This meteoric rise in share price has been interpreted as a resounding vote of confidence in the company's prospects, despite concerns about its exposure to various risks in the Chinese market.

Susannah Streeter, the head of money and markets at Hargreaves Lansdown, aptly noted: "Despite some concerns about the company's exposure to numerous risks in China, it's not stopped a juggernaut of enthusiasm."

Arm Holdings, a stalwart of the British technology industry, is renowned for its chip designs that power a wide array of devices, including smartphones and game consoles. Remarkably, it is estimated that approximately 70 per cent of the global population relies on products embedded with Arm's chips, including nearly all of the world's smartphones.

Rene Haas, the Chief Executive Officer of Arm Holdings, expressed optimism regarding the company's future growth prospects.

He emphasised that investments in artificial intelligence (AI) are fuelling increased demand for their products, stating: "You can't run AI without Arm. We think we're just at the beginning."

Arm's return to the stock market had been widely anticipated, with much debate surrounding its choice of listing location. Despite strong lobbying efforts to have the company list its shares in the UK, Arm decided to proceed with a US listing, dealing a blow to the London stock market.

Mr Haas, who is based in the US, cited Nasdaq's experience in handling large share sales by tech firms as the primary reason for this choice. Nevertheless, he did not rule out the possibility of considering a listing in London in the future.

Hermann Hauser, a key figure in the development of Arm's first processor, explained that Brexit played a role in Arm's decision to list in the US rather than the UK, as it had negatively impacted the London Stock Exchange's standing. He expressed his initial hope for a dual listing but acknowledged that this wasn't feasible due to the size of the IPO and the evolving landscape of the London Stock Exchange.

SoftBank, the conglomerate that acquired Arm seven years ago in a $32 billion deal, announced the sale of 95.5 million Arm shares during the IPO at a price of $51 each. Despite this divestiture, SoftBank will continue to maintain a substantial ownership stake, retaining roughly 90 per cent of the company.

It's worth noting that Arm Holdings had previously agreed to be acquired by US chip giant Nvidia, but this plan was abandoned in February of the preceding year. The proposed sale had encountered significant regulatory obstacles in multiple regions, including the UK, the US and the European Union.

Mr Haas acknowledged that Arm Holdings, like many other tech companies, faced challenges when navigating the complex political landscape associated with the Chinese market. Nevertheless, the company remained committed to its mission and growth prospects despite these hurdles.

In conclusion, Arm Holdings' triumphant return to the stock market through its record-breaking IPO valued at over $60 billion is a testament to its enduring appeal and potential for growth in the technology sector.

The company's decision to list in the US rather than the UK has generated discussions surrounding Brexit's impact on the UK's financial landscape. Despite the challenges posed by the Chinese market and regulatory complexities, Arm Holdings remains steadfast in its pursuit of innovation and dominance in the chip design industry.