Japanese multinational investment holding company, SoftBank Group (OTCMKTS:SFTBY) is actively working towards obtaining full control of Arm Ltd., a semiconductor company, ahead of its initial public offering (IPO) scheduled for next month. In pursuit of this goal, SoftBank has approached Vision Fund 1 (VF1), its $100 billion investment fund, which owns roughly 25% of Arm, to buy the stake.
Some of the major VF1 shareholders include Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala. By executing this transaction, SoftBank would provide Vision Fund’s shareholders with immediate windfall gains. In the event of the deal falling through, SoftBank would be compelled to undertake the longer route of divesting Vision Fund’s stake in Arm Ltd. to the public via open market trades, a process that could potentially extend over several years before realization.
SoftBank’s Vision for Arm
SoftBank currently owns 75% of Arm Ltd., the U.K.-based semiconductor and software design firm. The Masayoshi Son-led conglomerate has been trying to leverage its investment in Arm. Initially, it sought to sell to chip maker Nvidia (NASDAQ:NVDA), followed by an attempt at listing Arm on the London Stock Exchange. Unfortunately, both plans collapsed due to the inability to secure regulatory clearance.
Arm seeks to raise between $8 and $10 billion through its forthcoming IPO, with the company currently valued at between $60 and $70 billion. If the deal goes through, reports suggest that SoftBank will be selling fewer shares to the public. The company aims to maintain ownership of around 85% to 90% of Arm’s shares. Further, SoftBank has reportedly roped in big tech firms such as Nvidia, Intel (INTC), Google (GOOGL), Apple (AAPL), and Amazon (AMZN) to serve as anchor investors in Arm’s much-awaited Nasdaq IPO.
What is the Price Forecast for SoftBank Stock?
Jefferies analyst Atul Goyal is the only analyst to have given a rating to SFTBY stock within the past three months. Goyal has a Buy rating on SoftBank shares with a price forecast of $23.83, implying 1.4% upside potential from current levels.
Year-to-date, Softbank stock is up by 10.5%.
