Arm Ltd., the chip designer backed by SoftBank Group Corp., is in talks with Nvidia Corp. to join a group of potential investors to anchor its initial public offering, according to the Financial Times.
Nvidia, a longtime partner and client of Arm, is seeking to invest at a valuation of $35 billion to $40 billion, the paper said, citing unidentified people briefed on the talks. That compares with a valuation closer to $80 billion that SoftBank wants, it said.
Bloomberg earlier reported that Arm was in talks with possible strategic investors including Nvidia competitor Intel Corp. to participate in the year’s biggest IPO.
Bringing in anchor investors can help drum up interest and momentum for an IPO, especially given the elevated valuation that SoftBank is seeking. Arm’s success is critical for the Tokyo-based investment firm — which bought Arm for $32 billion in 2016 — to regain its footing after losing billions of dollars on startup investments.
Read more: Arm Chief Pitches Chip Designer as AI Play in Buildup to IPO
SoftBank founder Masayoshi Son has said he hopes the Arm IPO can be the largest ever by a chip company. Arm’s valuation still hasn’t been set and the company could be valued anywhere from $30 billion to $70 billion, Bloomberg News previously reported.
Shares of SoftBank erased earlier losses and rose more than 2% in Tokyo on Wednesday.
Arm is looking to raise as much as $10 billion in a New York listing later this year, after rejecting appeals from UK prime ministers to return to London, where it once traded.
The firm’s tech is found in most of the world’s smartphones and is pervasive across the electronics industry. SoftBank executives have been pitching lofty valuations on the chip designer by presenting it as an AI play with technology supporting AI infrastructure.
Anchor investors buying $100 million to $200 million worth of shares are increasingly popular for semiconductor-related IPOs. Growth equity firm General Atlantic invested about $100 million in Intel-backed Mobileye Global Inc.’s IPO last year while Qualcomm Inc. backed GlobalFoundries Inc.’s listing in 2021.