On Monday, those familiar with the matter said that SoftBank Group Corp (9984.T) chip designer Arm is close to securing enough investor support to achieve its fully diluted IPO valuation of $54.5 billion at the top of its indicated range and may ask investors to value it higher.

The sources said Arm would likely price the IPO at the top or above its $47-to-$51-per-share range when its underwriters close their books on Wednesday on the largest U.S. stock market debut in two years due to investor demand.

In light of the IPO’s oversubscription, Arm is considering extending the price range and pursuing a value of over $54.5 billion, sources added. The sources noted that Arm is also contemplating retaining the price range as is and pricing the IPO above it on Wednesday, which would raise the value to $54.5 billion.

Sources stated Arm would not issue additional shares because SoftBank intends to keep a 90.6% ownership in Arm after the $5 billion IPO.
One source said a decision to expand the price range would come two days after investors place crucial orders on Monday.

The individuals, who requested anonymity to disclose secret discussions, warned that certain investment commitments had not been formalized and the orders may alter.

SoftBank and Arm did not reply to queries for comment.

The value Arm has sought is lower than the $64 billion SoftBank paid last month to purchase the 25% share it did not already hold in the firm from its $100 billion Vision Fund.

Despite this reduced price, SoftBank would perform better than its $40 billion agreement to sell Arm to Nvidia Corp (NVDA.O), which it abandoned last year because of antitrust concerns.

Arm has already secured key investors in its IPO, including Apple (AAPL.O), Nvidia, Alphabet (GOOGL.O), AMD (AMD.O), Intel (INTC.O), and Samsung Electronics (005930. K.S.).

Last week, Arm began its IPO marketing to persuade investors it has growth potential outside the mobile phone sector, which it controls with 99% dominance.

Arm’s income has stagnated because of weak mobile demand amid a worldwide recession. Sales rose to $2.68 billion in the year to March from $2.7 billion.

On Thursday, Arm told prospective investors in New York that the cloud computing industry, which has just a 10% stake and more capacity to grow, is predicted to rise 17% annually through 2025, partially due to A.I. developments. The mobile market is predicted to rise 6%, while the automobile sector, which it controls 41% of, is expected to grow 16%.

Arm also informed investors that its license payments, most of its income, have been rising since the early 1990s. The last fiscal year saw royalty income rise to $1.68 billion from $1.56 billion.

Investors have scrutinized it. Investors have scrutinized Arm’s exposure to China with the U.S. and a rush to obtain chip supply. China accounted for 24.5% of Arm’s $2.68 billion fiscal 2023 sales.