The IPO “freeze” is finally thawing out.
Arm Holdings Limited launched its IPO early Tuesday morning to the tune of 95.5mm ADSs at $47-$51. This implies a market cap of $48.2b-$52.3b not including the greenshoe.
The first response from our team regarding this deal: it’s about time.
The IPO market has been practically non-existent since the top of the market in late 2021. That year ended with an $11.9b cash raise from Rivian to cap out a year in which 328 IPOs went public. The average price at first trade for 2023 IPOs was 18.8% above issue with a grand total of $138.5b was raised. 2022’s dreadful performance of 20 IPOs has been followed up with only 20 additional IPOs thus far in 2023. There has been an exhausting list of explanations for the hiatus but the core thesis circles around market instability due to uncertainty from the Fed.
Essentially, higher interest rates equate to a pause on IPOs.
But companies waiting in the wings, like Arm Holdings, can only hold off for so long. Finally, it’s where the rubber meets the road. Arm Holding’s launch comes at the intersection of concession on valuation versus new investors breathing new confidence into the future. The deal comes with the backdrop of a fellow chip-maker, Nvidia +230% YTD), enjoying an unprecedented rise.
There’s a who’s-who list of companies that have put their stamp of approval on the deal with $735m in “cornerstone” investments. But this accounts for less than 20% of the cash raise.
How will the rest of the deal be received?
Our team is busy compiling key datapoints, instrumental financial metrics and market sentiment regarding this deal. We collect feedback from the roadshow…from attendance to enthusiasm. Leading up to the IPO we also are feverishly gathering subscription levels, price guidance and messaging on when the books are to close. This is some of the key data that directly reflects the first-day and first week performance.
And this is what sets IPO Boutique apart from our competition.
When the IPO market kicks into high gear, you can guarantee one thing: noise. But with IPO Boutique on your team…we sift through the distractions to provide a comprehensive commentary, the data and a forecast that is tried and true. Our team has more than 60 years of IPO experience and contacts all over the street.
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