Arm's 2023 Relisting: SoftBank's Float Strategy Unpacked

In September 2023, chip designer Arm returned to the public markets, listing on Nasdaq in one of the year's largest IPOs. Its owner, SoftBank, had bought Arm in 2016 and taken it private. After a planned sale to Nvidia collapsed, SoftBank chose an IPO instead, but it sold only a small portion of the company.

The way SoftBank structured the listing, with a small float, strategic investors and a US rather than UK listing, offers lessons for founders, investors and anyone planning a major IPO. This case study unpacks the strategy and its consequences.

1. Background

• 2016: SoftBank acquired Arm, then listed in London, for about £24 billion, taking it private.
• 2020: Nvidia agreed to buy Arm for about $40 billion.
• 2022: The Nvidia deal was abandoned after strong regulatory opposition in several jurisdictions, leaving SoftBank to pursue an IPO.
• September 2023: Arm listed on Nasdaq, pricing at $51 per share and valuing the company at around $54 billion. Shares rose about 25% on their first day.

2. The Float Strategy

A small float

SoftBank sold only around 10% of Arm, retaining roughly 90%. A small float limits supply, can support the share price and lets the seller benefit from any future rise. It also means less liquidity and potentially higher volatility.

Strategic anchor investors

Several of Arm's major customers and technology partners, including Apple, Nvidia, Alphabet, AMD, Intel and Samsung, agreed to buy shares in the IPO. Their participation signalled confidence and helped secure demand.

US rather than UK listing

Despite Arm's British roots and lobbying from UK officials, SoftBank chose Nasdaq, citing deeper capital markets and investor familiarity with high-growth technology companies. The decision became part of a wider debate about London's competitiveness, which later contributed to UK listing reforms.

3. What Happened Next

• Arm's shares traded below their IPO price at times in late 2023, then rose sharply in 2024 amid enthusiasm for AI-related companies.
• The small float amplified price moves in both directions.
• Arm's valuation became one of the most debated in the market, trading at high multiples of earnings.
• SoftBank's large retained stake became a significant source of value and financial flexibility for the group.

4. Lessons for Founders and Investors

• Float size is a strategic choice. Small floats can support prices and preserve upside but reduce liquidity and increase volatility.
• Anchor investors matter. Strategic buyers can validate a story and secure demand, though they may also bring conflicts or expectations. See what strategics want.
• Venue choice is about investor base. Companies weigh valuation, analyst coverage, index inclusion and investor familiarity when choosing where to list.
• A failed sale can lead to an IPO. When regulators block strategic acquisitions, public markets can offer an alternative exit. See exit strategies.
• Controlling shareholders shape outcomes. Public investors should understand how a dominant holder's needs and plans could affect future share sales. See IPO lock-up expiry.

For more on semiconductor investing, see semiconductor startups.

Frequently Asked Questions

Why did SoftBank take Arm public?

After the planned sale to Nvidia was abandoned due to regulatory opposition, an IPO offered a way to realise value while retaining most of the upside.

Why was the float so small?

A small float can support the share price, limit supply and allow the seller to keep most of the potential gains.

Why did Arm list in New York instead of London?

SoftBank cited deeper capital markets and stronger investor appetite for high-growth technology companies in the US.

What risks come with a small float?

Lower liquidity, greater volatility and the possibility of large future share sales by the controlling holder.

The Bottom Line

Arm's relisting shows how a controlling shareholder can use float size, strategic anchors and venue choice to shape an IPO. The strategy delivered a strong debut and preserved upside for SoftBank, but also created a thinly traded, volatile stock. For founders and investors, it is a clear example of how IPO structure affects everyone who owns the shares afterwards.

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This article is general information, not investment advice. Figures are approximate.