Amazon and Apple reportedly in talks with British chip designer ARM Holdings to be ‘anchor investors’ before September IPO
ARM Holdings continues to talk to big name tech firms about investing in the firm, before its highly anticipated return to the public markets in September.
A number of media reports have named both Amazon and Apple as being so called ‘anchor investors’ in the Cambridge-based firm.
Last week ARM Holdings owner SoftBank reportedly targetted an initial public offering valuation of between $60 billion and $70 billion, for a listing slated for September.
The roadshow for the listing of ARM is apparently slated to start the first week of September, with pricing for the IPO the following week.
An IPO roadshow is typically a series of events leading up to the listing, that give a company the opportunity to showcase its value proposition, impress potential investors, and ultimately increase their buy-in.
But now Reuters reported, citing people familiar with the matter, that e-commerce giant Amazon is in talks about joining other technology companies as a cornerstone investor in ARM ahead of its initial public offering (IPO).
Amazon’s potential involvement in the IPO, which has not previously been reported, underscores ARM’s significance in cloud computing, Reuters reported.
Amazon Web Services makes its own processing chip called Graviton, using ARM’s design.
ARM and Amazon declined to comment, Reuters reported.
Meanwhile Nikkei Asia has reported that Apple and Samsung could invest in ARM, as its hardware designs underpins all of Apple’s custom silicon processors.
Nikkei Asia reported that SoftBank will officially apply to the US Securities and Exchange Commission for the listing later this month.
Softbank had submitted a draft registration in May with the US SEC.
Then Softbank must obtain approval from Nasdaq, Nikkei Asia reported. It added that leading global chipmakers, including Apple, Samsung Electronics, Nvidia and Intel, will invest in ARM as soon as the company is listed on the market.
At the moment, 75 percent of ARM’s shares are owned by SoftBank, while the remaining 25 percent stake is held by the SoftBank Vision Fund – a unit that invests in tech firms.
The Vision Fund will reportedly sell 10 to 15 percent of its ARM shares on the open market, and Softbank seeks to raise as much as $10 billion from the listing.
Raising this much money would make it one of the biggest-ever IPOs in the history of the tech industry.
Indeed if it does raise $10 billion, it would rank the ARM listing as third only to Alibaba, after it raised $25 billion in its 2014 IPO, and Meta (Facebook) which in May 2012 raised $16 billion in its IPO.
ARM has been in talks with a number of big name tech firms, including Intel, Alphabet, Apple, Microsoft, Nvidia, TSMC, and Samsung, about an investment ahead of its IPO.
These investors would reportedly not gain any board seat or control, but by holding a few percentage stakes in ARM, they hope to exert some influence on the management of ARM.
ARM was formed in 1990 when it was spun out of Acorn Computers, and its chip designs are used in 95 percent of smartphones due to their low power consumption.
This makes ARM a major force in the semiconductor market, and it licensing its designs to some of the world’s largest consumer tech manufacturers including Qualcomm and Apple.
Japan’s SoftBank had acquired ARM for $32bn in 2016.
Before that, ARM was actually dual-listed in London and New York until the 2016 SoftBank acquisition – an acquisition the UK government at the time welcomed, despite concern at ARM falling into the hands of a foreign entity.
Route to IPO
But how did ARM decide to return to the public markets?
Soon after the Nvidia deal fell through, Softbank’s Masayoshi Son in February 2022 indicated that the US Nasdaq would be the most likely listing destination for ARM.
The head of Japan’s SoftBank then reiterated this stance in June 2022.
The IPO process heated up in June when it was reported that ARM was in talks with some of its biggest customers and end users about bringing on one or more ‘anchor investors’ in the IPO.
Then in July it was reported ARM was talking to its former suitor Nvidia to be an anchor investor.