The British chip designer Arm looked set to be valued at more than $60bn as it debuted on the Nasdaq stock exchange in the biggest US share listing of the year.
Arm set a price of $51 a share, valuing the company at $54.5bn on Wednesday. But as trading began on Thursday morning, investor appetite for the company’s initial public offering (IPO) pushed its share price up 10% to $56.10, valuing the company at just below $60bn.
It later rose by as much as 20% up, before settling back at 17% up, giving a valuation of around $64bn.
Founded in Cambridge in 1990 as Advanced Risc Machines, Arm supplies chipmakers with circuit designs and is the dominant supplier to the mobile phone market with its circuitry in 99% of smartphones. Japanese investment company SoftBank bought Arm for £24bn ($32bn) in 2016.
The company – and investors – expect its technology to expand into artificial intelligence (AI) systems in the coming years, and other areas including cloud computing and the automotive industry.
Excitement about AI has already driven huge rises in the stock prices of other tech companies. Shares in the US chipmaker Nvidia have more than tripled this year, and in May it became the first chipmaker to be valued at over $1trn.
Nvidia announced plans to takeover Arm in 2020 but the deal collapsed amid regulatory scrutiny from the US, UK and China.
“The Arm IPO is the most hyped listing we’ve had in the markets for a while,” said Kyle Rodda, senior market analyst at brokerage firm Capital.com. “It will also be a major test of risk appetite and whether these high-growth, speculative companies still attract interest in a new world of higher interest rates.”
Arm is the largest company to announce a share sale this year, which has been the worst for IPOs since 2009, dampened by surging interest rates and still high inflation. The success – or otherwise – of the sale will be closely watched. The grocery delivery company Instacart is also planning an IPO and has cut its valuation to $9.3bn, less than a quarter of the private valuation it enjoyed two years ago.
The sale is also a major test for Masayoshi Son, the chief executive and billionaire founder of SoftBank, after years of high-profile missteps, including his championing of WeWork, the office rental company once valued at $47bn and now teetering on the edge of collapse.
SoftBank’s purchase of Arm came just weeks after the UK voted to leave the European Union. The then UK chancellor, Philip Hammond, hailed the deal: “Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors. Britain is open for business – and open to foreign investment.”
Arm was listed in London and in the US before SoftBank bought it. But in a blow to the UK government, which lobbied hard for a London listing, SoftBank filed for a US-only listing for the company in May.
Arm’s co-founder Hermann Hauser said Brexit “idiocy” was partly to blame for the decision.
“The fact is that New York, of course, is a much deeper market than London, partially because of the Brexit idiocy the image of London has suffered in the international community,” he told the BBC.
