Japanese multinational investment holding SoftBank Group (OTCMKTS:SFTBY) is actively working to gain full control of Arm Ltd., a semiconductor company, ahead of its initial public offering (IPO) scheduled for next month. To achieve that goal, SoftBank has approached Vision Fund 1 (VF1), its $100 billion mutual fund that owns about 25% of Arm, to buy the stake.
The largest VF1 shareholders include the Public Investment Fund of Saudi Arabia and Mubadala of Abu Dhabi. By completing this transaction, SoftBank would provide Vision Fund shareholders with immediate windfall gains. Should the deal fall through, SoftBank would be forced to take the longer route and buy Vision Fund’s stake in Arm Ltd. to sell to the public through open market transactions, a process which could potentially take several years to be realised.
SoftBank’s vision for Arm
SoftBank currently owns 75% of Arm Ltd., the UK-based semiconductor and software design company. The Masayoshi Son-led conglomerate has sought to capitalize on its investment in Arm. A sale to the chip manufacturer Nvidia was originally planned (NASDAQ: NVDA), followed by an attempt to list Arm on the London Stock Exchange. Unfortunately, both plans failed because no official approval could be obtained.
Arm is looking to raise between $8 billion and $10 billion from its upcoming IPO, with the company currently valued at between $60 billion and $70 billion. Should the deal go through, reports suggest that SoftBank will sell fewer shares to the public. The company aims to own approximately 85% to 90% of Arm’s shares. In addition, SoftBank reportedly has major technology companies such as Nvidia, Intel (INTC), Google (GOOGL), Apple (AAPL) and Amazon (AMZN) to serve as anchor investors in Arm’s highly anticipated Nasdaq IPO.
What is the SoftBank stock price prediction?
Jefferies analyst Atul Goyal is the only analyst to have rated SFTBY stock for the last three months. Goyal has a buy rating on SoftBank stock with a price prediction of $23.83, which implies an upside potential of 1.4% from current levels.
Year-to-date, Softbank stock is up 10.5%.
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