SoftBank in Talks to Acquire Remaining Stake in Arm from Vision Fund 1
SoftBank is currently in discussions to acquire the remaining 25% stake in Arm, a chip designer, from its Vision Fund 1. This potential deal could bring significant returns to investors who have been waiting for strong profits. SoftBank plans to list Arm on Nasdaq next month with a valuation of $60 billion to $70 billion.
If the negotiations are successful, this move would provide a major immediate windfall to Vision Fund 1 investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala. These investors have experienced losses due to SoftBank’s unsuccessful bets on startups like WeWork and Didi Global.
Alternatively, if Vision Fund 1 were to sell its Arm shares in the stock market after the IPO, it could take one to two years to complete and would carry more risk since Arm’s shares could potentially decrease in value.
The profitability of Vision Fund 1 in the latest quarter has generated excitement among investors, which could improve SoftBank’s chances of attracting capital for future funds.
SoftBank’s CEO, Masayoshi Son, has hired investment bank Raine Group to advise on the negotiations. Son has recused himself from Vision Fund 1’s decision-making process to ensure an independent decision in the best interest of investors.
The exact valuation for the transaction between SoftBank and Vision Fund 1 has not been disclosed, and it is possible that no agreement will be reached.
Cornerstone Investors for Arm’s IPO
Arm’s IPO would not only benefit Vision Fund 1 but also SoftBank, which has recently reported quarterly losses. SoftBank has been in talks with various technology companies, including Amazon.com, to bring them on board as cornerstone investors for Arm’s IPO.
Since taking Arm private in 2016 for $32 billion, SoftBank sold a 25% stake to Vision Fund 1 for $8 billion in 2017. The company has been in a defensive position since May 2022 but plans to shift to “offense” mode due to advancements in artificial intelligence.
Arm’s IPO, which follows the collapse of a deal with Nvidia Corp, could raise up to $10 billion. Arm’s business model of licensing designs has helped it perform better than the broader chip industry despite recent challenges in the smartphone market.
