Investment banks working on Arm Holdings Ltd.’s initial public offering are set to share upwards of $100 million in fees from the chip designer’s listing, according to people familiar with the matter.
The SoftBank Group Corp.-owned company is poised to pay the banks 2% of the $5 billion to $5.4 billion it is seeking to raise in the IPO, the people said. The fee pool would consist of about a 1.75% base fee and a 0.25% incentive fee awarded at the firm’s discretion, the people said, asking not to be identified as the information isn’t public.
Based on previous estimates of how much of Arm could be sold in the offering, the listing could value the company at $50 billion to $54 billion, Bloomberg calculations show. A 2% share of an IPO of up to $5.4 billion would amount to as much as $108 million. As the banks leading the offering, Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Mizuho Financial Group will each receive 17.5% of the fee pool, the people said. Some of the banks in less active roles will receive about 3% each, and the remainder will be divided among those lower down the hierarchy. The chip firm’s listing filing lists a total of 28 banks working on the IPO.Preparations for the listing are ongoing and details could change, the people said.
Arm’s share sale could be the year’s largest, even as both the size and valuation are reduced from the company’s original targets, Bloomberg News has reported. The firm has lined up some of its biggest customers — Apple Inc., Nvidia Corp., Intel Corp. and Samsung Electronics Co. — as strategic investors, but the stock debut will depend on how investors more broadly weigh factors including China risks, a slowing smartphone market and artificial intelligence adoption.
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