Chip giant Arm raises nearly $5 billion in year's largest IPO

Arm, the British chip design giant controlled by SoftBank, has raised nearly $5 billion in its initial public offering.

Why it matters: This is the year's largest IPO, easily topping Johnson & Johnson spinout Kenvue, and it's likely to maintain that mantle.

Details: The company priced 95.5 million shares at $51 a piece, raising $4.87 billion and at the high end of its $45-$51 offering range.

• This gives the company a fully diluted valuation of around $54.5 billion.
• It plans to list on Thursday on the Nasdaq, trading under ticker symbol "ARM."

Zoom out: Arm is being viewed by bankers as a standalone, rather than as reflective of current IPO market trends — or predictive of future ones.

• That said, it comes ahead of two highly anticipated offerings next week for grocery delivery company Instacart and marketing SaaS company Klaviyo.

Flashback: Nvidia in late 2020 agreed to buy Arm for $40 billion, in what would have been the semiconductor sector's largest-ever merger. But it killed the deal in early 2022 because of regulatory opposition.

• SoftBank revealed plans to take Arm public within the Nvidia merger termination announcement.

The bear case: Arm is going public in the midst of a semiconductor sales slump, partially caused by declining smartphone sales. Plus, SoftBank has a history of overvaluing assets, particularly those that touch Vision Fund.

The bull case: Chip demand is shifting toward AI applications, and Arm could be viewed as a complimentary play to Nvidia, a former merger partner and current market darling.