rice The Nasdaq may be a hotspot for tech companies looking to go public.But British semiconductor design firm likely to become year’s biggest initial public offering (IPO) Every effort had to be made to attract Arm.
The battle over this listing proposal is the leaders of each country, exchange officials, and Arm’s parent company. It involved the founder of SoftBank Group Corp., Masayoshi Son, in a fierce months-long battle on three continents. Nasdaq Chief Executive Officer Adena Friedman and her team have advised on a $50 million joint marketing package and inclusion in the Nasdaq 100 index, according to people familiar with the matter. The proposal to include eventually won Arm’s IPO.
Mr. Friedman and Nasdaq officials said they saw stiff competition from British Prime Minister Sunak and proponents of a dual listing on the London Stock Exchange (LSE), as well as New York Stock Exchange Group (NYSE) Group President Lynn Martin’s surprising performance. They had to fend off an aggressive last-minute offensive, the people said.
Arm’s strong interest in going public reflects the company’s interest in technology and the lack of a strong IPO.SoftBank G is the largest IPO It is testing the appetites of investors to raise $10 billion, Bloomberg reports.
“It will help improve the image of NASDAQ,” he said. Oppenheimer analyst Owen Lau said. “Since last year, the IPO market has been quite sluggish.
While the Nasdaq is considered the premier destination for tech company debuts, the NYSE hosts many large IPOs of established incumbents.Of the top 10 tech IPOs in New York over the past decade, ride-hailing giant Operates Uber Technologies and photo/video sharing app Snapchat Seven, including Snap, were on the NYSE.
SoftBank said Arm had secretly filed for an IPO in New York, but has not publicly confirmed its choice of exchange. SoftBank declined to comment further when contacted for this article.
The road to Arm’s IPO comes as SoftBank plans to sell the company to U.S. semiconductor maker Nvidia in February 2022. It started after I gave up. On a conference call at the time, Mr. Son said the alternative would be to list Arm. And answered a question about where it might be listed.
“The US is the best place to list Arm,” and “the Nasdaq is the most likely.” Mr. Sun answered yes.
But in the months that followed, Son received appeals from Britain, first by former Prime Minister Boris Johnson and then Prime Minister Sunak, to backtrack on his initial ideas. Prime Minister Sunak and his advisers have argued that Cambridge-based Arm, formerly listed on the LSE, will make an enthusiastic return home. They advocated a dual listing in London and New York.
Son asked Arm CEO Rene Haas and Chief Financial Officer Jason Child to negotiate the best possible deal. Specializes in IPO-related advice We enlisted Pat Healy, a consultant at Issuer Networks.
During the negotiations, Prime Minister Sunak called Arm’s Haas and Child and the SoftBank team became more serious about a dual listing, the people said. Prime Minister Sunak welcomed Mr Haas to his official residence last December, and Mr Son joined the discussion via videoconference. Son was impressed by the prime minister’s enthusiasm and understanding of the details of Arm’s business, the people said.
The Prime Minister’s Office declined to comment on specific company discussions.Prime Minister Sunak’s A transparency report shows the prime minister met with Arm and SoftBank in December.
Senior SoftBank staffers strongly opposed a dual listing, citing the added cost and complexity, but worried that Mr. Son would be susceptible to Sunak’s personal charms.
SoftBank wanted a number of exemptions, including related party transactions, to list in London, as well as funding and backing. The LSE requires companies to obtain shareholder approval for related-party transactions, but SoftBank requires investor approval whenever Arm seeks to do business with its hundreds of tech companies. He was concerned that he would have to obtain a license, and asked for exceptional treatment in line with US standards.
US Ambassador to Japan Emmanuel has taken the unusual step of presenting the US side of the case in response to Prime Minister Sunak’s efforts. He met with Mr. Son and his aides more than a dozen times, according to people familiar with the matter. Ambassador Emanuel has repeatedly expressed his view that a dual listing on the LSE would “do more harm than good” for Arm. The ambassador has worked at the White House, an investment bank, and was mayor of Chicago.
Ambassador Emmanuel had been working with Mr. Friedman and Nasdaq staff on a study showing that dual-listed stocks tended to underperform their peers over the long term. The report analyzes more than 550 companies with valuations between $10 billion and $50 billion, looking at stocks listed only in the U.S., American Depositary Receipts (ADRs) of companies listed outside the U.S., London ADRs of listed companies are also compared. It concludes that stocks listed only in the US have 2.5x trading volume, about 3x liquidity, and a median price-to-book ratio of 2x.
“U.S.-listed peers have tighter spreads, higher valuations and higher liquidity than foreign-listed companies’ ADRs,” said a report to SoftBank, seen by Bloomberg. Are listed. In addition, there are “additional costs to consider” such as preparing financial statements under US and UK standards, he said.
In February of this year, Friedman flew to Tokyo, met with Son in person, and proposed a solo listing on the Nasdaq.
By March, SoftBank and Arm were leaning toward a sole listing on the Nasdaq, in part because they couldn’t get the related-party transaction exemptions they sought. But they have extracted concessions from Friedman and his team in the midst of competition from Britain. Officials said they quickly secured the “ARM” ticker prepared by the NYSE.
Further complicating matters was the $50 million marketing budget and the Nasdaq 100 Index, people familiar with the matter said. SoftBank wanted more discretion in allocating funds to its preferred events and wanted the Nasdaq’s backing on certain criteria to give Arm the best chance of being included in the index. Inclusion in the Nasdaq 100 Index will lead to ownership by many large institutional investors.
In early April, when Nasdaq and SoftBank were trying to resolve these issues, the NYSE made a surprise last-minute appeal. The exchange has made a strong appeal with funding and backing and has “suspended Arm,” one of the people said. The NYSE declined to comment when contacted for this article.
After further negotiations over the detailed terms, Friedman and the team agreed to the key terms put forward by Haas’ team, the people said. Arm now has more control over how its $50 million marketing budget, which includes funds and credits for specific events, is applied. It also received a commitment from Nasdaq to support Arm’s efforts to be included in the Nasdaq 100 Index based on certain criteria, the people said. The Nasdaq declined to comment.
Friedman and the Nasdaq made no commitment to include Arm in the Nasdaq 100 index, and any such decision would be based solely on performance, another person familiar with the matter said.
Apple or The index, which is considered a global barometer of tech companies like Microsoft, is replaced every December, and many companies want to be included. Currently, the smallest companies in the index are Sirius XM Holdings, Lucid Group and Rivian Automotive. Arm is unlikely to be included in the Nasdaq 100 index this December, but next year is likely based on the timing of its final listing, the people said.
Rosenblatt Securities’ Andrew Bond said the criteria for the Nasdaq 100 are so well defined that there is little room for concessions. Every company must be in one of the industry segments of the index, achieve certain trading metrics, and have a certain size of business. “Obviously it fits the bill,” says Arm.
In any event, an Arm IPO would be an important victory for the Nasdaq, Bond said.
“In an environment where there aren’t too many IPOs, this is important,” he said. “Historically, the Nasdaq was seen as an exchange for listing tech companies, and the NYSE was a giant exchange for other big companies.”
Original title: Nasdaq’s Surprisingly Tough Fight for the Year’s Marquee IPO (Excerpt)