SoftBank has finalized a $ 10 billion loan from the bank prior to the initial public offering of the blockbuster British chip designer Arm Holdings.
The loan secured to Arm was a prerequisite set by SoftBank for banks to participate in the stock offerings they are aiming to make by the end of March next year, according to people familiar with the matter.
Goldman Sachs, JPMorgan Chase and Mizuho Financial Group of Japan are poised to play a leading role in the service, these people said. Several other banks are also discussing listings with SoftBank.
Masayoshi Son, the founder of Softbank, wants a valuation of at least $ 50 billion in arms. However, bankers involved in the negotiations told the Financial Times that Arm’s significantly higher rating was “very ambitious,” given market conditions. One warned that the timing could be off, but said the loan debate would be completed next week. Softbank declined to comment.
The planned IPO, a deal to sell a UK company to Nvidia for $ 66 billion, collapsed last month due to an objection filed by European and US regulatory agencies and antitrust authorities. Softbank unveiled Arm for $ 32 billion in 2016.
Competition among banks participating in Arm’s IPO is fierce as markets are depleted elsewhere, tech stock sales, rising interest rates and the war in Ukraine have slowed investor desires.
Son has raised debt before an IPO in the past as a tactic to raise cash for other investments in global tech companies. The plunge in SoftBank’s stock price has also urged the group to raise money in recent weeks, and the group has liquidated its stake in several ventures.
Softbank’s balance sheet is under pressure after Chinese assets, including Ride Hailing Group’s Diddy, e-commerce platform Alibaba, and other Chinese high-tech companies, have been significantly sold after regulatory crackdowns in the country. I am. The tech group has rebounded in response to comments from Chinese regulators, but the outlook remains uncertain.
SoftBank’s predicament is exacerbated by the recent withdrawal of key figures from the Vision Fund and the unresolved turmoil in Arm’s Chinese operations. Allen Wu, head of a Chinese joint venture, has been caught up in a long-standing battle over the management of Arm’s key business units in the world’s largest smartphone market, pose a daunting challenge to the IPO process.
Arm is one of the most important companies at the heart of the global technology industry. Its chip design is licensed to semiconductor companies and electronics manufacturers around the world and is used in most smartphones produced around the world. The company has had a great deal of trouble prospering under SoftBank’s ownership, as costs have risen significantly and profits have fallen. However, the course revisions over the past year have increased the profits of chip designers.
Softbank’s stock price has fallen 41.5% over the past year to 5402 yen. Bloomberg previously reported that SoftBank is seeking up to $ 8 billion in IPO-related loans.
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