Nvidia in talks to become anchor investor in Arm IPO

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Chip designer Arm is in talks to bring in Nvidia as an anchor investor, and the SoftBank-owned company is planning a New York listing as early as September, according to people familiar with the talks. clarified.

Nvidia, the world’s most valuable semiconductor company, was forced to abandon its planned $66 billion acquisition of Arm last year after regulatory objections to the deal were filed.

The Silicon Valley-based chipmaker is one of several existing Arm partners, including Intel, and the UK-based company has a long-term stake in the initial public offering stage, according to people familiar with the matter. They say they want to get it.

Potential investors are still negotiating the valuation with Arm. A person familiar with the discussion said NVIDIA wants to enter at a price that would give Arm a total value of between $35 billion and $40 billion, while Arm wants closer to $80 billion. said.

Arm aims to attract large major investors as it launches IPO in New York to help stock price as SoftBank, which bought Arm for £24 billion ($32 billion) in 2016, sells shares to do.

Many private tech companies and their advisers are watching closely to see if Arm can make a successful 2023 IPO after a year of sluggish new listings.

Securing the advance support of a small number of anchor investors is a common tactic in difficult IPO markets and serves as a way to secure demand and reassure other potential investors.

Arm and NVIDIA declined to comment. Negotiations have yet to be concluded and may not result in investment, the people said.

Arm is expected to be the most valuable company to go public in the U.S. since automaker Rivian went public in late 2021 with an initial $70 billion market cap.

It is widely considered to be less risky than many IPO candidates given its track record as a publicly traded company.

A person close to SoftBank said founder Masayoshi Son was personally involved in finding an anchor investor for Arm. Ahead of the IPO, Son has focused on boosting revenues for chip designers. SoftBank declined to comment.

Arm and Nvidia have reached out to U.S. regulators to allay potential concerns over what is likely to be a small, minority investment in the low hundreds of millions of dollars, according to people close to the talks. .

When Nvidia first announced its plans to acquire Arm in September 2020, US and European competition authorities opposed it. The deal could limit rivals’ access to Arm’s intellectual property found in most smartphones and a growing segment of the automotive market, as well as give NVIDIA access to competitively sensitive information. both companies said.

Nvidia is already a customer of Arm, but the investment negotiations for the company have changed from its core business of “graphics processing units”, dedicated chips that speed up specialized tasks such as 3D rendering and artificial intelligence training, to “central technology”. , demonstrating a greater ambition to expand to A processing unit that handles most other computing functions.”

A person familiar with the plan said Arm was keen to participate in Nvidia’s bid as a way to put AI at the heart of the UK group’s growth plans. “AI will appear every third word in the proposed document,” the person said. “NVIDIA’s involvement is very important because it means AI.”

The move puts Nvidia in more competition with Intel, whose CPUs have long dominated the PC and data center markets.

Nvidia, which became the first chipmaker to reach a $1 trillion valuation in May, recently announced its first to use Arm’s design as part of a so-called superchip designed for artificial intelligence and high-performance computing. Produced CPU “Grace Hopper”.

Global listings plummeted last year as falling stock prices, rising market volatility and an uncertain economic outlook shunned investors. But activity has started picking up in recent weeks, thanks to a broader NVIDIA-led rally in its stock price.

Additional report by Richard Waters

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