SoftBank reportedly buys back 25% Arm stake from its Vision Fund unit

INFRA

SoftBank Group Corp. has reportedly become Arm Ltd.’s sole shareholder after buying back a stake in the chip designer from a subsidiary.

Reuters reported the transaction today, citing people familiar with the matter.

Arm develops chip designs that semiconductor makers use as the basis of their products. The U.K.-based company offers blueprints for building central processing units, graphics cards and a variety of other processors. Its technology can be found in billions of devices worldwide, including most smartphones.

SoftBank Group acquired Arm in 2016 for $32 billion. Shortly thereafter, the company sold 25% of Arm’s shares to its SoftBank Vision Fund subsidiary for $8 billion. The subsidiary operates two startup funds that have raised more than $100 billion in capital from SoftBank and outside investors.

According to today’s Reuters report, the company has bought back the 25% Arm stake it sold to its Vision Fund unit. The purchase reportedly valued Arm at $64 billion, twice what SoftBank paid to acquire the chip designer in 2016. The deal is described as a “major victory” for the Vision Fund unit’s biggest investors.

The report comes against the backdrop of SoftBank’s efforts to take Arm public. In April, the chip designer disclosed that it had confidentially filed paperwork for a stock market listing. Recent reports suggest that Arm is seeking to go public at a valuation of $60 billion to $70 billion.

It’s believed Arm intends to list its shares on the Nasdaq. The initial public offering’s roadshow, a marketing effort through which a company promotes its shares to prospective investors, is expected to kick off in the first week of September.

According to Reuters’ sources, Arm plans to publish the filing for its IPO on Monday. Bloomberg obtained a draft copy of the filing ahead of time and published revenue data from the chip designer’s most recent fiscal year today. The draft reportedly shows that Arm’s revenue dropped by 1% year-over-year, to $2.68 billion, in the 12 months ended March 31.

The sales decline is said to have continued into the first quarter of the company’s current fiscal year. According to Bloomberg, Arm logged a 2.5% year-over-year revenue drop in the quarter ended June 30.

Earlier this week, it was reported that SoftBank was hoping to raise between $8 billion and $10 billion through Arm’s IPO. Reuters’ sources indicated that this fundraising target has since been revised downward. The reason, the sources detailed, is that SoftBank intends to sell fewer Arm shares in the offering than it had originally planned.

SoftBank reportedly seeks to retain a stake of up to 90% in the chip designer following the IPO. The offering is expected to take place in September. 

Image: Arm