Softbank-backed Arm Holdings ends 25% higher on trading debut with a valuation of nearly $70 billion

Shares of Softbank-backed Arm ended 25 percent higher on its trading debut at $63.59, marking the year’s biggest listing. The closing gives Arm Holdings a market capitalisation of $68 billion on a fully diluted basis.

Arm Holdings raised $4.7 billion from investors on Wednesday in the largest IPO of the year. It sold shares at $51, the higher end of the IPO price band of $47-$51. The company sold 95.5 million american depository shares (ADRs) in its IPO. At the higher end of the price band, Arm was valued at $54.5 billion.

The stock began trading at $56.1, a 10 percent premium to its issue price of $51 before rising as much as 30 percent. The listing also brings a windfall for SoftBank, whose nearly 90 percent stake in the chip designer increased by more than $12 billion on Thursday.

This marks an end to a long drought of Tech IPOs which had taken a backseat due to higher interest rates and the subsequent correction in tech stocks. This had resulted in many companies putting their IPO on the back burner.

Chip designer Arm’s technology is used in 99 percent of the world’s smartphones. 70 percent of the human population uses devices powered by Arm’s technology.

While Arm had previously aimed to raise $8 billion to $10 billion, that target was lowered at least in part because SoftBank decided to buy the roughly 25 percent stake held by its Vision Fund and then hold onto a larger portion of the shares in the company.

TSMC, Intel, Nvidia, Apple, AMD, Alphabet and other customers of Arm will also be buying shares worth over $700 million at the IPO price today.

Arm was previously a public company until 2016 in both London and New York before Softbank took it private in a $32 billion purchase.

Nvidia announced that it will acquire Arm in 2020 in a $40 billion cash and stock deal. The deal size almost doubled courtesy a jump in Nvidia’s stock price. However, the deal was called off in 2022 after European and US antitrust regulators blocked the deal saying it killed any potential competition.

This is the biggest listing in the US since Rivian Automotive debuted in late-2021 at a valuation of over $100 billion. Shares of Rivian are currently trading around the $20 mark from its peak of $180. The correction marked an end to the euphoria around IPOs for a good two years.

The US has had 108 IPOs so far in 2023, which is 30 percent lower than the same period last year. Until this time in 2022, the country had already seen 155 IPOs. 64 out of those 108 IPOs are trading below their IPO price.