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Amazon Likely to Become Cornerstone Investor in SoftBank’s Arm Ltd Before IPO

Amazon Likely to Become Cornerstone Investor in SoftBank’s Arm Ltd Before IPO

Written by Sanjay Kumar

News highlights

  • Amazon Considers Key Role in Arm Ltd IPO, Underlining Cloud Computing Significance.
  • Arm Aims for $8-10 Billion in Nasdaq Debut; Talks with Tech Giants for Investment.
  • SoftBank’s Arm IPO to Bolster Recovery Efforts, Amid Vision Fund Challenges.

E-commerce company

  • CEO: Andy Jassy (5 Jul 2021)
  • CFO: Brian T. Olsavsky
  • Mascot: Peccy
  • Founder: Jeff Bezos
  • Founded: 5 July 1994, Bellevue, Washington, United States
  • President: Andy Jassy
  • Number of employees: 1,541,000 (December 2022); U.S.: 950,000 (June 2021)

Sources familiar with the matter have disclosed that Amazon is in discussions to assume the role of a cornerstone investor, joining forces with other technology companies, in SoftBank Group Corp’s Arm Ltd prior to its upcoming initial public offering (IPO). This recent revelation emphasizes the significance of Arm in the field of cloud computing. This is particularly noteworthy as Amazon Web Services, a major contender in the cloud industry, has developed its own processing chip, Graviton, utilizing Arm’s design.

Expected to debut on the Nasdaq in early September, as revealed by one of the sources, Arm (Semiconductor company) is striving to amass between $8 billion and $10 billion through its IPO, as reported by Reuters. Both Arm and Amazon have chosen not to provide any comments on the matter.

Reports from Reuters have detailed Arm’s ongoing discussions with around ten technology firms, including major names like Intel, Alphabet, and Nvidia, all concerning potential investments before the impending IPO. Notably, these potential investors would not acquire any board representation or control, clarifies the insider sources.

One of the sources conveyed that Arm’s intention behind enlisting cornerstone investors is to fortify its relationships with its primary clients and enhance the overall attractiveness of the IPO. The involvement of such pivotal investors is expected to lend credibility and momentum to the offering.

The forthcoming IPO is anticipated to deliver a much-needed boost to SoftBank’s fortunes. The conglomerate has been actively working towards this listing as part of its efforts to recover from setbacks faced by its extensive Vision Fund, following the underperformance of several technology startup investments.

The groundwork for this IPO was laid after SoftBank’s plan to sell Arm to Nvidia for a staggering $40 billion fell apart last year. This dissolution was prompted by regulatory objections from both the United States and Europe. Since then, Arm’s business performance has outshone the broader chip industry, owing to its strategic focus on data center servers and personal computers, which contribute to higher royalty payments.

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