Arm IPO aims to raise US$5 billion to US$7 billion, down from its previous goal, as investors weigh China risks
- The valuation of the SoftBank-owned chip firm could end up in the range of US$50 billion to US$60 billion, instead of US$60 billion to US$70 billion
- Arm’s prospectus ‘reported revenue erosion and higher exposure to China than many expected’, according to an Astris Advisory analyst
A dose of reality is tempering the outlook for Arm’s public listing as the chip designer kicks off its roadshow this week, lowering expectations of both the valuation and the amount to be raised.
The SoftBank Group-owned chip unit now seeks to raise US$5 billion to US$7 billion, down from as much as US$10 billion it previously sought, Bloomberg News reported. The valuation could also end up in the range of US$50 billion to US$60 billion, instead of a previous target range of US$60 billion to US$70 billion.
“We expect US$50 billion – US$60 billion is the more realistic target,” Astris Advisory analyst Kirk Boodry wrote in a note Friday. “The prospectus reveal was also less supportive as Arm reported revenue erosion and higher exposure to China than many expected.”
Arm runs most of its China business through independent unit Arm China, which is its single largest customer and accounted for almost a quarter of sales in the year ended March, according to the prospectus. The paperwork also confirmed that Arm’s revenue fell about 1 per cent to US$2.68 billion in the last fiscal year.