The IPO market kicks into high gear this week. SoftBank Group’s chip CPU unit Arm Holdings Ltd. (ARM proposed) is set to price its $4.7 billion IPO – the biggest IPO since Rivian (RIVN) in November 2021 – on Wednesday night (Sept. 13, 2023). Instacart (CART proposed), the online grocery delivery service, is expected to disclose its IPO terms in an SEC filing soon – possibly as soon as the sun rises on Wall Street today (Monday, Sept. 11, 2023). Instacart’s IPO proceeds are estimated at $1 billion.
“I think there’s a lot of pent-up demand,” a veteran IPO investor says, regarding his perception of how these two unicorns’ IPOs will fare. (A unicorn is a privately held company with a valuation of at least $1 billion.)
Arm Holdings plans to offer 95.5 million American Depositary Shares (ADS) at a price range of $47.00 to $51.00 to raise $4.68 billion, according to its F-1 filing dated Sept. 5, 2023.
If Arm prices its IPO at the $49.00 mid-point of that range, the British chip CPU designer would have a valuation of about $50.28 billion. Each ADS represents one ordinary share.
Barclays, Goldman Sachs, J.P. Morgan and Mizuho are the lead joint book-runners of Arm’s IPO.
Arm’s stock is expected to trade Thursday, Sept. 14, on the NASDAQ.
Advanced Micro Devices, Apple, Google, Intel, NVIDIA and Samsung Electronics are among 10 cornerstone investors – all Arm clients – indicating interest in buying an aggregate of up to $735 million of ADS – or about 15.7 percent of the IPO, according to the prospectus. Cadence Design Systems, MediaTek’s affiliated entities, Synopsys and TSMC Partners round out the list of cornerstone investors.
The number of shares in the IPO – 95.5 million – equals less than 10 percent of Arm’s outstanding shares. That percentage reflects the preference of SoftBank Group’s Chairman Masayoshi Son, according to The Wall Street Journal.
Arm’s IPO will be the biggest initial public offering since EV maker Rivian (RIVN) went public in November 2021. Its estimated IPO proceeds will exceed the $3.8 billion raised by Johnson & Johnson’s spinoff Kenvue (KVUE) this spring.
Arm, based in Cambridge, England, says its chip CPUs are used in more than 99 percent of the world’s smartphones, the prospectus says.
For the fiscal year ending March 31, 2023, Arm earned net income from continuing operations of about $524 million on revenue of about $2.68 billion, the prospectus says.
During its IPO roadshow last week, Arm said that it expects revenue growth of 11 percent in its current fiscal year and an increase in the mid-20 percent range in fiscal 2025, boosted by demand for chips to power data centers and artificial intelligence (AI), Bloomberg reported earlier.
Instacart on the Verge
The Wall Street Journal reported on Sunday (Sept. 10, 2023) that Instacart is aiming for “a valuation of about $8.6 billion to $9.3 billion in its imminent IPO.” That’s just “a fraction of what the grocery-delivery company was previously worth, in the latest sign of diminished investor enthusiasm for private growth companies,” according to The WSJ.
Instacart, founded in 2012, has been on “the watch list” of highly anticipated initial public offerings for more than two years.
The San Francisco-based online grocery delivery giant is profitable. For the year that ended June 30, 2023, Instacart earned net income of $596 million on revenue of $2.9 billion.
Goldman Sachs, J.P. Morgan, BofA Securities and Barclays are the lead joint book-runners of Instacart’s IPO.
The word on the Street is that Instacart is likely to disclose its IPO terms and launch its roadshow early today (Monday, Sept. 11, 2023). The Instacart IPO’s pricing is likely next week – on Tuesday, Sept. 19. Instacart’s stock is expected to make its NASDAQ debut on Wednesday, Sept. 20.
Stay tuned.
(For more information about these companies, please check the IPO Calendar and the individual IPO Profiles found on IPOScoop.com’s website.)
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Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.
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