Softbank plans to negotiate with its Vision Fund to increase Arm’s shareholding ratio and maintain higher control

Reuters has reported that Softbank is orchestrating discussions with its venture capital fund, the SoftBank Vision Fund 1 (established in 2017 and often referred to as VF1), with ambitions to acquire the latter’s 25% stake in Arm Holdings.

It’s come to light that Softbank’s Chief Executive, Masayoshi Son, has enlisted the expertise of the Raine Group as investment consultants. To circumvent potential conflicts of interest, Son has recused himself from deliberations related to the SoftBank Vision Fund 1, ensuring that the fund can make autonomous decisions that align with its investors’ interests.

Currently, Softbank possesses approximately 75% of Arm’s equity, while the residual 25% is held by SoftBank Vision Fund 1. Should an agreement be reached, it’s anticipated that Softbank’s stake in Arm would escalate to a commanding 85-90%. Consequently, when Arm resumes its listing on the NASDAQ in September, Softbank might mitigate the proportion of shares it offloads, thereby preserving its dominant influence over Arm.

However, whispers in the industry suggest that this potential deal might encounter obstacles, and the outcomes of Softbank’s discussions with the Vision Fund remain nebulous.

Arm is poised for its NASDAQ listing as early as September, with aspirations to raise capital between $8 billion and $10 billion. This endeavor is projected to elevate Arm’s market valuation to a staggering $60-70 billion, marking one of Wall Street’s most monumental Initial Public Offerings this year. Beyond Softbank’s intent to augment its stake in Arm, prominent entities, including Intel, Qualcomm, and Amazon, are also keen to bolster their holdings. Such a strategy would grant them greater influence during future negotiations involving Arm’s technological licenses and might shield them from escalating licensing costs.