Investors eagerly purchased shares of UK chip designer Arm Holdings as it made its return to the stock market, propelling its market worth beyond $60 billion (£48.3 billion).
On Thursday, the shares concluded trading at a value exceeding $63 each, marking a nearly 25% increase from the $51 per share that Arm initially received from the sale.
This sale marked the largest initial public offering of the year, generating $4.87 billion for its owner, Softbank Group.
The surge in share price is widely interpreted as a vote of confidence in the company.
“Despite certain worries about the company’s exposure to various risks in China, it hasn’t dampened the overwhelming enthusiasm,” remarked Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown.
A prominent figure in the British technology sector, Arm specializes in chip design for a range of devices, including smartphones and gaming consoles. They estimate that around 70% of the global population uses products that depend on their chips, encompassing nearly all of the world’s smartphones.
Chief Executive Rene Haas expressed that the company envisions additional growth opportunities, especially with the increasing demand for its products driven by investments in artificial intelligence (AI).
“You can’t run AI without Arm,” he stated. “We believe we’re only at the outset of this journey.”
Arm’s return to the stock market was eagerly awaited. The company, headquartered in Cambridge, had encountered significant pressure to have its shares listed in the UK.
However, in March, to the disappointment of the London stock market, Arm revealed its decision to proceed with a listing in the US.
Mr. Haas, who is situated in the US, explained that the choice to list on the Nasdaq was due to their expertise in managing substantial share sales for tech companies. He also mentioned that the company remained open to the possibility of listing in London at a later time.
Hermann Hauser, who played a role in the development of the first Arm processor, suggested that the UK’s decision to leave the European Union had contributed to the company’s shares being listed in the US rather than the UK, impacting the London Stock Exchange’s status.
He said, “The hope, of course, was to have a dual listing… but that wasn’t really possible because of the size of the [initial public offering], and the London Stock Exchange isn’t as big as it used to be.”
SoftBank confirmed the sale of 95.5 million shares at $51 each, with the company retaining a roughly 90% stake.
Arm had been taken private by SoftBank seven years ago in a $32 billion deal. The proposed sale of Arm to US chip giant Nvidia was abandoned in February of the previous year due to significant regulatory obstacles in the UK, US, and European Union.
Mr. Haas noted that navigating the political complexities related to China was “challenging,” but it posed similar challenges for Arm as it did for other tech companies.