Arm Ltd., taking a page from Alibaba Group Holding Ltd.’s landmark listing almost a decade ago, will split underwriter fees evenly among the four banks leading its initial public offering, according to people familiar with the matter.
(Bloomberg) — Arm Ltd., taking a page from Alibaba Group Holding Ltd.’s landmark listing almost a decade ago, will split underwriter fees evenly among the four banks leading its initial public offering, according to people familiar with the matter.
That’s a departure from how companies usually plan their IPOs, where banks vie for the lead-left spot for the chance to rake in the biggest share of fees. Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Mizuho Financial Group are set to be listed in Arm’s prospectus when it’s filed publicly this month, said the people, who asked not to be identified discussing private information.
Alibaba’s record $25 billion IPO in 2014 split the fees evenly among six banks that each earned an equal 15.7% share of the fees. Alibaba’s IPO was also backed by Arm’s majority owner, SoftBank Group Corp., which took the chipmaker private in 2016.
Arm is aiming to raise as much as $8 billion to $10 billion in a September IPO, valuing the company at $60 billion to $70 billion, Bloomberg News has reported. While it won’t approach Alibaba’s share sale, it’s still expected to rank among the top five technology IPOs of all time and to stir the slumbering market for new listings.
Representatives for Arm, Barclays, Goldman, JPMorgan and Mizuho declined to comment.
Arm is expected to allocate a minority of its IPO shares to strategic investors. Bloomberg News has reported that companies such as Intel Corp. and Nvidia Corp. are considering participating in the share sale. Arm plans to choose several strategic investors to take common stock in the listing, the people said. Which companies will be investing hasn’t been finalized yet, they added.
The Cambridge, UK-based company’s technology is used in almost every smartphone. It sells the blueprints needed to design microprocessors, and licenses technology known as instruction sets that dictate how software programs communicate with those chips. The power efficiency of Arm’s technology helped make it ubiquitous in phones, where battery life is critical.
A successful Arm IPO would mark a rare recent victory for SoftBank, which struggled after an ill-fated foray into startup investing. Under founder Masayoshi Son, SoftBank invested more than $140 billion in unprofitable startups beginning in 2017, inflating valuations worldwide before they were punctured by the Covid pandemic, China’s tech crackdown and the US Federal Reserve’s rate hikes. Last year, its Vision Fund lost a record $30 billion.
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