Sunday, September 3, 2023

Arm Holdings IPO: "You cannot be serious, Son"

From A Long Time In Finance via Reaction Magazine, September 1:

It is the most eagerly awaited share offering of the year. There was much wailing and gnashing of teeth when the owners of the UK-based chip designer Arm decided to list in the US in preference to London. The chance to add a stock that would easily make it into the FTSE100 top ten was enough to get Rishi Sunak on the case to try and list the business at home and boost London’s moribund new issue market.

He lost. Arm is being touted as a $64bn stock, and the offer process is underway in New York, with a thumping legal document describing the business. To save you having to read it, the boys at Doomberg (A sort of antidote to Bloomberg) have struggled through its 300 pages and unravelled a distinctly odd transaction which is being used to support talk of that market value.

It would mark an impressive gain on the $32bn that the world’s biggest gambler paid seven years ago to take Arm off the London stock market. Masayoshi Son would prefer to be described as a “Japanese billionaire technology entrepreneur, investor and philanthropist” in charge of Softbank, a world-scale technology group.

Recently Son has been playing with the shareholdings in Arm, moving them at an internally-generated value of $64bn for the business. However, that door-stopping document suggests that Arm could be worth a great deal less when it comes to market. As Reuters pointed out: “Scattered throughout the hundreds of pages of Arm’s prospectus are details of the company’s labyrinthine relationship with China, its second-largest market.”....


Additionally, we saw this in 2021: 

Chips: "ARM China Seizes IP, Relaunches as an ‘Independent’ Company"