For almost two years, SoftBank has been looking to monetize its stake in Arm Holdings, a U.K.-based semiconductor and processor company. The company was looking to IPO in the U.K. but has shelved those plans. Could Arm Holdings IPO in the U.S. now?
In 2016, SoftBank acquired Arm Holdings for $31.4 billion, in one of the biggest acquisitions for the global private equity giant. And in 2020, SoftBank announced the sale of Arm Holdings to Nvidia for $40 billion in cash and stock.
Arm Holdings’ co-founder opposed the sale to Nvidia
Arm Holdings co-founder Hermann Hauser was against the deal to sell the European tech company to “Americans.” There were also concerns that the deal wouldn't get regulatory approval in Europe or China. In fact, the U.K.’s Competition and Markets Authority investigated the deal amid antitrust concerns.
With its lead in smartphone chip architecture, Arm Holdings would have been a good fit for either Nvidia and Qualcomm. In June 2021, Qualcomm CEO Cristiano Amon said that the company might consider investing in Arm Holdings.
Timeline of Arm Holdings’ IPO
Arm Holdings and Nvidia called off their deal in Feb. 2022, pointing to “significant regulatory challenges.” The company then started working on an IPO in the U.K. in 2023. However, the Financial Times has now reported that the IPO has been shelved.
There has been political turmoil in the U.K. following the resignation of prime minister Boris Johnson. Rishi Sunak, who headed the Treasury in Johnson’s cabinet, is the front runner to replace Johnson.
SoftBank has suffered massive losses on its investments
Arm Holdings might now look at an IPO in the U.S. as SoftBank looks to monetize its stake. The last two years have been tough for the Japan-based private equity fund. It lost a lot of money after the WeWork debacle, and its market cap has now fallen from the $47 billion it was seeking in its 2019 IPO to below $4 billion.
As it's one of the biggest investors in Chinese companies, SoftBank has also been hit by the country’s tech crackdown. The value of its stake in Alibaba has plunged, and it took a blow when Didi decided to delist from U.S. markets under pressure from the Chinese government.
Will Arm Holdings IPO in the U.S.?
Arm Holdings might not have an easy ride if it decides to IPO in the U.S. The U.S. IPO market has been virtually dead amid the stock market crash, and those who opposed Arm Holdings’ sale to an American company might also oppose a U.S. listing.