Exclusive-SoftBank’s Arm eyes pricing IPO at top of range or above-sources

By Echo Wang and Anirban Sen

NEW YORK (Reuters) – Arm, the chip designer owned by SoftBank (TYO:) Group Corp, is getting close to securing enough investor support to attain the fully diluted valuation of $54.5 billion it was seeking in its initial public offering (IPO) at the top of its indicated range, and is considering asking investors to value it higher, people familiar with the matter said on Sunday.

Following strong demand from investors, Arm will likely be able to price the IPO at the top or above its $47-to-$51-per-share range when its underwriters close their books on Wednesday on the biggest U.S. stock market debut in two years, the sources said.

Arm is discussing the possibility of raising the price range and seeking a valuation of more than $54.5 billion, in light of the IPO’s oversubscription, the sources said. Alternatively, Arm is also considering keeping the price range as is and pricing the IPO above it on Wednesday, which would also lead to a valuation higher than $54.5 billion, the sources added.

Arm will not, however, offer more shares, given that SoftBank wants to retain a 90.6% stake in Arm following the approximately $5 billion IPO, as originally planned, the sources said.

A decision on whether to raise the price range will come in the next two days after some key orders from investors come in on Monday, according to one of the sources.

The sources, who spoke on condition of anonymity to discuss confidential deliberations, cautioned that some anticipated investor commitments had not been finalized and the trajectory of the orders could still change.

SoftBank and Arm did not immediately respond to requests for comment.