SoftBank mulls US$8 billion margin loan as part of Arm IPO

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SoftBank mulls US$8 billion margin loan as part of Arm IPO

SoftBank Group is asking banks vying to be part of a potential listing of Arm Ltd to underwrite a margin loan of about US$8 billion, Bloomberg News reported on Wednesday, citing people familiar with the matter.

Earlier this month, SoftBank sought to list Arm after scrapping plans to sell the company to US chipmaker Nvidia in a deal valued at up to US$80 billion.

"It (Arm) had the rare hallmarks of a SoftBank investment turning to gold, but instead Arm will head back for listing in financial markets where tech stocks have been seriously tarnished of late," Hargreaves Lansdown analyst Susannah Streeter said at the time, adding, "such a bumper valuation is likely to be far from reach."

Britain's Arm, which named a new chief executive last week, said it would go public before March 2023 and SoftBank CEO Masayoshi Son indicated that would be in the United States, most likely the Nasdaq.

The margin loan financing will be linked to Arm's initial public offering (IPO) stock and is one option under consideration, according to the report.

Such loans allow companies to borrow money against the value of securities owned. SoftBank in 2020 revealed plans to borrow up to 500 billion yen (US$4.33 billion) from 16 domestic and foreign financial institutions by using almost a third of its stake in telco SoftBank Corp as collateral.

For Arm, banks are planning to pitch IPO valuations of more than US$50 billion, the report said.

SoftBank did not immediately respond to a Reuters request for comment.

The Japanese conglomerate acquired Arm, whose technology powers Apple Inc's iPhone and nearly all other smartphones, in 2016 for US$32 billion.

Arm licenses its architecture and technology to customers such as Qualcomm Inc, Apple and Samsung Electronics Co Ltd which design chips for devices from mobile phones to computers.

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