SoftBank's Arm IPO proves popular despite recent investment failures

SoftBank's Arm IPO proves popular despite recent investment failures

Masayoshi Son, founder of Japan's SoftBank (TYO: 9984 ), is hoping to regain his reputation as a successful investor with the highly anticipated Initial Public Offering (IPO) of Arm, a British chip designer. The IPO, which is expected to list 10% of the company in the US, aims to raise between $4.5 and $5.2 billion this week. This would value Arm at up to $52 billion, a significant increase from the $32 billion SoftBank spent to acquire the firm in 2016.

Despite this potential gain, the valuation falls short of the $60-70 billion SoftBank was rumored to have expected. Arm's products are utilized in 99% of the world's smartphones, but its exposure to artificial intelligence (AI), a future growth area that excites investors, is considered less robust.

Son's reputation as an investor has suffered significant blows due to failed investments in recent years. SoftBank reported losses of around $20 billion over the past two years, largely due to unsuccessful bets on companies such as WeWork, Uber (NYSE: UBER ), and Oyo Rooms. These failures followed a series of successful early investments by Son in Yahoo! and Alibaba (NYSE: BABA ) during the 1990s, which earned him a reputation for having a 'Midas touch'.

Despite these setbacks, the Arm IPO has proven popular among investors and is reportedly 10 times oversubscribed. This has prompted SoftBank to consider raising the price. Furthermore, SoftBank's remaining 90% stake in Arm could potentially be leveraged to borrow money for future investments.

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