SoftBank Group has reason to celebrate as Arm Holdings, its largest single holding, went public on Nasdaq at $51 per share and has since climbed to $60. However, investors have not shown much enthusiasm for SoftBank (SFTBY) shares, which have remained relatively flat.
This IPO is a significant win for SoftBank as it allows the company to monetize the rest of its business while still retaining about 90% ownership of Arm. At a stock price of $60, Arm's total worth is estimated to be $64 billion, making SoftBank's remaining stake valued at $58 billion. This accounts for roughly 87% of SoftBank's current market capitalization, which stands at approximately $66 billion.
It is worth noting that Arm's market cap is now on par with SoftBank's, even though SoftBank possesses other valuable assets such as its control over the Vision Fund venture capital portfolio. SoftBank's shares typically trade at a substantial discount to the company's net asset value, usually around 50%. Thus, it comes as a surprise that SoftBank shares have actually dipped slightly on Thursday, reaching $22.55.
In 2016, SoftBank acquired Arm for $32 billion. The planned sale of Arm to Nvidia for $40 billion in cash and stock fell through in early 2022 due to regulatory opposition. Subsequently, SoftBank announced its intention to focus on taking the company public, and today their strategic move has paid off.
During an interview with CNBC, SoftBank CEO Masayoshi Son revealed that the company aims to hold onto as much of Arm as possible for as long as possible, indicating no immediate plans for further sales. This could potentially explain the muted reaction in SoftBank shares. While the IPO proceeds bring some gains, the real measure of success for SoftBank's Arm strategy will be seen over time.