Can British chipmaker Arm lift the shutters on the global IPO market?
For Masayoshi Son, the eccentric chief of Japanese investment giant Softbank, today marks something like a return to happier times.
The once mythical investment guru has suffered a bruising year in which Softbank’s splashy bets on tech startups came crashing down and its fabled Vision Fund haemorrhaged consecutive quarterly losses north of $20bn.
Today, however, Son will wave British chipmaker Arm onto the public markets in the biggest IPO of the year at a relatively muted valuation of $54bn.
The float comes after a barren period for IPOs globally in which firms have looked to swerve the turmoil that has shaken markets since Russia’s invasion of Ukraine.
Globally, just 615 firms raised $60.9bn in the first half of the year, a 36 per cent fall in value on an already torrid 2022.
Arm’s IPO, while not the first, is comfortably the biggest of the year and was reportedly 12 times oversubscribed. So as a smiling Son rings the Bell at the Nasdaq, many firms and investors will be hoping it is a sign of things to come.
“It was always more important for SoftBank to get this IPO away than get it away at a bumper price,” James Ashton, chief of the Quoted Companies Alliance and author of Arm chronicle The Everything Blueprint, told City A.M.
“Arm is benefiting from scarcity value of the shares and investors are looking past the challenges in China. Now Rene and team have to prove there is good growth to come and they can power up profitability.
“It feels as though more stocks will follow and we have to hope that means better times in London too.”
Arm was forced to rein in its initial target valuation but the float comes as a number of big name firms once again begin flirting with the public markets.
Flat-sole sandal specialist Birkenstock said this week it was buckling up for a float and US delivery firm Instacart is plotting another bumper IPO in the US.
While big name IPOs are for the time localised in the US, analysts say it could be a sign that the market is “whirring back to life” globally.
“Hopes that the end of the interest rate hiking cycle is in sight is also driving more confidence. With Arm so firmly in the spotlight today, it does cement the disappointment that London lost out on this major-league listing,” Susannah Streeter, head of money and marets at Hargreaves Lansdown, told City A.M.
“But elsewhere other signs of IPO life are springing up. Renk Group, which manufactures components for the defence and energy sectors, and Schott Pharma said they intend to list in Frankfurt before the end of the year.”
Some companies are still wary of cautious sentiment, Streeter added, particularly for stocks sensitive to consumer demand.
In a more bullish outlook this morning, head of equity capital markets at Unicredit Silvia Viviano said both sides of the Atlantic were on the cusp of a capital markets comeback.
“2024 will be the year for IPOs, in Europe and the US,” she told Bloomberg News.
In London, which has suffered a slew of negative headlines and among the most bruising downturns of the past 18 months, officials and regulators will be hoping that some of Son’s joy today will soon be drifting across the Atlantic.