British chip designer Arm set for £40bn Wall St debut
British chip designer Arm will begin trading on Wall Street today in what is expected to be the biggest US public listing of the year.
The semiconductor firm has secured enough backing from investors to hit the top end of its £37.60 to £40.80 per share price range, which would value Arm at more than £40billion.
Just 10 per cent of shares in the Cambridge-based company are scheduled to start trading in New York today, raising about £4billion for Japanese owner SoftBank, which will retain a 90 per cent stake.
The company reportedly closed its order book early on Tuesday, indicating strong demand for the shares, most of which has come from institutional investors and tech giants such as Apple, Nvidia, Google, Intel and Samsung Electronics.
Marketing efforts for the Initial Public Offering have been targeted at institutional investors, leaving retail savers to buy shares at potentially higher prices once they begin trading, according to Reuters.
Float: Arm has secured enough backing from investors to hit the top end of its £37.60 to £40.80 per share price range, which would value Arm at more than £40bn
Susannah Streeter, head of markets at Hargreaves Lansdown, said: ‘The first chance UK investors will get to snap up a slice of the company will be when the company starts trading on the NYSE and so they should be prepared for volatility that often can hit stocks after a launch onto the stock market.
‘Retail investors hoping for a front seat on Arm’s journey ahead should be mindful that the future AI landscape is hard to map.’
Arm’s core business is designing chips for smartphones – it has a 99pc share of the mobile phone market – and it is hoping to expand its reach in cloud computing and artificial intelligence.
The British firm’s decision to list in the US was a blow for the London Stock Exchange.
The company was founded in Cambridge in 1990 and was part of the FTSE 100 when it was publicly listed in London and New York between 1998 and 2016, before it was taken private by SoftBank.
The Japanese investor had planned to sell Arm to rival US chip firm Nvidia in 2020 but the £31billion deal fell apart after hitting regulatory hurdles.
After the deal failed, UK politicians lobbied SoftBank to have a dual listing in London as well as the New York Stock Exchange. But SoftBank snubbed the City in March, saying New York was the ‘best path forward’.
US listings have become increasingly popular tech entrepreneurs, allowing them to reach higher valuations.
Streeter added: ‘Arm was very much seen as a British success story, but owner SoftBank is pulling no sentimental punches here and wants the best bang for its buck.’
The City suffered a further setback on Tuesday as packaging giant Smurfit Kappa said it would move its premium listing from London to New York as part of a merger with US firm WestRock, meaning it will leave the FTSE 100 index.
Building supplier CRH has also announced plans to switch its primary listing to New York later this month and plumbing supplier Ferguson shifted its listing to the US last year.