Day: September 5, 2023

SoftBank Group’s (9984.T) Arm is seeking a valuation of more than $52 billion in its initial public offering, the chip designer said on Tuesday as it begins marketing for the biggest U.S. stock market flotation of the year.

SoftBank is offering 95.5 million American depository shares of the United Kingdom-based company for $47 to $51 apiece and is looking to raise up to $4.87 billion at the top of the range, Arm said in a regulatory filing.

The valuation that Arm is chasing now represents a climb-down from the $64 billion valuation at which SoftBank last month acquired the 25% stake it did not already own in the company from its $100 billion Vision Fund.

Yet even with this more modest valuation ask, SoftBank would fare better than its $40 billion deal to sell Arm to Nvidia Corp (NVDA.O), which it abandoned last year amid opposition from antitrust regulators.

Jamie Mills O’Brien, portfolio manager at British fund manager Abrdn, said he found SoftBank’s valuation ask in the IPO “more palatable than initially discussed.”

“We are watching closely how the company handles the relationship with its China business – alongside any further impacts from the technology ‘war’ between China and the United States,” he said.

The Japanese conglomerate will own 90.6% of Arm’s ordinary shares after the offering closes, the company said, adding that it will not receive any proceeds from the IPO.

Arm has signed up many of its major clients as investors in its IPO, including Apple (AAPL.O), Nvidia (NVDA.O), Alphabet (GOOGL.O), Advanced Micro Devices (AMD.O), Intel (INTC.O) and Samsung Electronics (005930.KS).

The company said the ‘cornerstone investors’ have separately indicated an interest in buying a combined $735 million of the ADS being sold.

Arm’s listing, the biggest in New York since Rivian (RIVN.O) in late 2021, is expected to buoy the IPO market globally and fuel other startups toward going public as its success would signal the return of investor appetite for technology companies.

It will also be a milestone for SoftBank, as it taps several marquee technology names as investors to drum up support for the company whose designs power more than 99% of the world’s smartphones.

Reuters first reported on SoftBank’s proposed price range for the IPO on Saturday. Sources also said it could possibly raise this range before the IPO prices, should investor demand prove strong.

Arm, whose client list includes the world’s biggest tech giants, generates a big share of its revenue through royalty fees based on either the average selling price of the customer’s Arm-based chip or a fixed fee per chip.

For the year ended March 31, Arm’s sales fell to $2.68 billion, hurt mainly by a slump in global smartphone shipments.

Unlike most loss-making but high-growth tech companies that debut with lofty valuations but later plummet below list price, Arm is profitable. This is expected to significantly reduce investor anxieties, analysts have said.

Sara Russo, senior analyst at Bernstein, said it is early days for Arm to benefit from the boom in artificial intelligence but the space represents an area of potential growth for Arm.

Analysts have said Arm can potentially ride on Nvidia’s coattails, which has been the biggest beneficiary of the AI boom with the stock surging more than 230% year-to-date, as its chips must be coupled with energy-efficient central processing units (CPUs) – Arm’s specialty.

Arm was founded in 1990, as a joint venture between Acorn Computers, Apple Computer, and VLSI Technology.

Its shares traded on the London Stock Exchange and the Nasdaq from 1998 until 2016, when it was taken private by SoftBank in a deal that valued it at $32 billion.

Barclays (BARC.L), Goldman Sachs (GS.N), JPMorgan Chase (JPM.N), and Mizuho Financial Group (8411.T) are the lead underwriters for the offering.

If the underwriters exercise their right to buy shares in Arm in full as part of ‘greenshoe option’, it would take the IPO amount to be raised to $5.2 billion.

Arm, which has tapped a total of 28 banks for the IPO, has not picked a traditional “lead left” bank and will split underwriter fees evenly among the top four banks.

Arm expects to trade on the Nasdaq Global Select Market under the symbol “ARM”.

U.S. President Joe Biden on Tuesday announced former Treasury Secretary Jack Lew as his nominee to be ambassador to Israel, picking a high-profile political figure for the post at a time of tense relations between the two countries.

Lew, who must be confirmed by the Senate, will face a complicated political situation, as Israeli Prime Minister Benjamin Netanyahu pushes through a judicial overhaul opposed by many Israelis and the Biden administration.

He would succeed Ambassador Tom Nides in the post.

The Senate’s Democratic leader, Chuck Schumer, welcomed the announcement in remarks as the Senate reopened after its August recess.

“Mr. Lew is precisely the person for the job of ambassador to Israel we need,” Schumer said.

Schumer gave no timetable for a vote on Lew’s confirmation, which would take place after a hearing and vote in the Foreign Relations Committee.

In addition to serving as Treasury secretary, Lew under former President Barack Obama was a White House chief of staff and deputy secretary of state for management and resources.

Lew was director of the Office of Management and Budget in President Bill Clinton’s cabinet from 1998 to 2001. In both the Democratic Clinton and Obama administrations, Lew served on the National Security Council.

Earlier, as special assistant to Clinton, he was an architect of the national service program, Americorps.

There is no evidence that U.S. Senate Republican leader Mitch McConnell has a seizure disorder or suffered a stroke, the attending physician for Congress said on Tuesday after the senator froze for the second time in recent weeks.

In a one-paragraph letter to the Kentucky Republican, Dr. Brian Monahan said he reached his conclusion after a comprehensive neurological assessment including several medical evaluations that included brain MRI imaging, EEG study and consultations with several neurologists.

“There is no evidence that you have a seizure disorder or

that you experienced a stroke, TIA or movement disorder such as Parkinson’s disease,” Monahan said.

“There are no changes recommended in treatment protocols as you continue recovery from your March 2023 fall.”

Last Wednesday, McConnell, 81, froze up for a second time in little more than a month.

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Ukrainian lawmakers voted on Tuesday to restore a requirement that officials declare their assets, a measure sought by the International Monetary Fund, but included a loophole critics say dampens its effect.

The mandatory disclosures were introduced in 2016 but were made optional and restricted from public view after Russia’s full-scale invasion last year because they were considered a security risk.

The IMF had singled out the return of the requirement as one of several benchmarks for paying out part of a $15.6 billion assistance package.

Fighting graft is also a requirement for Ukrainian accession to the European Union and President Volodymyr Zelenskiy’s government has declared it a priority alongside the war effort.

Parliament approved a version of the measure requiring officials to declare their assets, lawmaker Yaroslav Zheleznyak said, but keeping the disclosures sealed off from the public for another year.

Anti-graft campaigners say keeping the registry closed defeats the primary purpose of the declarations, a key pro-transparency reform introduced after the 2014 Maidan revolution.

“The hidden fortunes of deputies and officials will destroy the trust of Ukrainians. Honest officials have nothing to hide,” the Anti-Corruption Action Centre, a leading Ukrainian NGO, said in a statement.

“The desire to hide one’s property from the public only indicates a desire to steal public money.”

The head of Zelenskiy’s own party called the bill “an incredible disappointment”. It now goes to the president for approval, and supporters of the reform have urged him to veto it.

Before early 2022, public servants from municipal deputies to the president had been required to submit detailed annual declarations including information on personal finances, cars and property.

The National Agency for Corruption Prevention, a state watchdog, reviews the declarations and can launch legal action if it suspects ill-gotten wealth.

Ukrainian investigative journalists have regularly reported alleged instances, including during wartime, of lawmakers and other officials owning lavish homes and driving flashy cars.

A June opinion poll commissioned by Transparency International found that 77% of Ukrainians believed corruption was among Ukraine’s most serious problems.

Texas Attorney General Ken Paxton, the state’s top law-enforcement official, could lose his job in an impeachment trial on corruption charges led by his fellow Republicans that begins on Tuesday.

Paxton has been suspended from his position since the Republican-led Texas House of Representatives voted to impeach him on 20 corruption charges in May, including aiding a donor and persecuting whistleblowers.

Now his fate rests with the state Senate, also controlled by Republicans, which will vote on whether to remove him.

Paxton, who is under investigation by the FBI, has denied any wrongdoing and says the impeachment drive is a political witch hunt.

The trial, which is likely to last several weeks, could expose a split among the state’s Republicans that echoes the national party’s divisions over former U.S. President Donald Trump, who leads polling for his party’s 2024 presidential nomination despite four criminal prosecutions.

Paxton, 60, has been elected three times despite legal woes that stretch back to 2015.

As attorney general, he has backed powerful oil and gas interests and pursued restrictions on abortion and transgender rights. He has led Republican state opposition to Democratic President Barack Obama’s policies and filed a lawsuit seeking to overturn Trump’s 2020 election defeat.

Paxton’s impeachment was triggered by his request that House lawmakers approve a $3.3 million settlement he reached with four former staff members who accused him of abuse of office and were subsequently fired. Lawmakers did not respond to the request.

The Texas House voted 121-23 to impeach him on 20 articles that accuse him of improperly aiding a wealthy political donor, conducting a sham investigation against the whistleblowers in his office, and covering up wrongdoing in a separate federal securities fraud case, among other offenses.

Paxton’s trial in the 31-member Senate is expected to last for several weeks. All 12 Democrats are expected to vote against him, meaning nine Republicans would need to oppose him to reach the two-thirds majority necessary to permanently remove him from office.

Former Republican Texas Governor and two-time presidential candidate Rick Perry wrote in the Wall Street Journal last month that senators have a duty to set aside politics and look hard at all the evidence.

Jonathan Stickland, who heads a political action committee that is backed by three billionaire oil tycoons, has said he will work to ensure Republicans who oppose Paxton face a well-funded primary opponent in their next election.

Bob Stein, a political scientist at Rice University, says that pressure could help Paxton win acquittal.

“If senators want to hold onto their seats, let alone do something in the future like run for Congress, they have to watch carefully what they do because of these political donors backing Paxton,” Stein said.

But Cal Jillson, a political scientist at Southern Methodist University, pointed to the lopsided House vote as a sign that Paxton might not hold on to his job.

“There is great security in crowds. The crowd of Republicans that voted to impeach him in the House and those that will likely vote against him in the Senate are going to be harder to punish,” Jillson said.