Softbank plans to reduce the IPO scale of arm due to the current sluggish share price of chip stocks

Source: financial Associated Press

    On April 22, according to people familiar with the matter quoted by Bloomberg, Softbank Group expects to retain the controlling stake in arm after the IPO of its chip business, which means that the proportion of equity sale will be lower than originally expected.

    Softbank acquired arm in 2016. Since then, it has planned to sell arm to NVIDIA, but the sale plan failed earlier this year. Subsequently, Softbank plans to IPO arm.

    An unnamed person familiar with the matter said that in view of the current sharp decline in chip stocks, Softbank has decided to sell only a small part of arm‘s shares now, providing more opportunities for higher valuations in the future.

    The above-mentioned people familiar with the matter said that Softbank raised $8 billion in term loans with its shares in arm as collateral, which also provided it with sufficient financial room for maneuver, so that it can hold a larger share in arm at present and wait for the market conditions to improve.

    Softbank confirmed earlier this month that it was ready to obtain a $8 billion term loan guaranteed by arm‘s shares. It is said that 11 banks have provided loans to it, including JPMorgan Chase, Barclays, Santander, BNP Paribas, Credit Agricole and Goldman Sachs

    It is revealed that the size and timing of IPO may change in the first quarter of next year. It is said that Softbank hopes that arm‘s valuation will reach at least $60 billion, and its goal is to make more profits through IPO than those sold to NVIDIA.

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