Shares in SoftBank's Arm Holdings(ARM.O) soared almost 25% above their Nasdaq debut price on Thursday, in the largest initial public offering of shares in nearly two years, rekindling investor hopes for a turnaround in the moribund market for initial public offerings (IPO).

The stock, which had opened at $56.10, notched a 24.68% gain to close at $63.59, giving the British chip designer a magnificent return to public markets following a seven-year absence. The IPO had priced at $51.

Softbank will retain a nearly 90% stake in the Arm. 

Arm Holdings CEO Rene Haas, center, rings the Nasdaq Opening Bell at the Nasdaq MarketSite during his company's IPO, in New York's Times Square, Thursday, Sept. 14, 2023.

Most consumers use at least one product that contains Arm’s chips, though many people may not be familiar with the company itself. Its chip design is used in virtually all smartphones, the majority of tablets and digital TVs. More recently, Arm has expanded into artificial intelligence, smart devices, cloud computing, the metaverse and autonomous driving.

Arm’s offering is an important development for the IPO market, which has seen relatively few companies go public the past two years. It’s also a key moment for the Japanese technology investor Softbank, which acquired Arm in 2016, as well as investments banks such as Goldman Sachs that recently have taken in far less revenue from underwriting and advisory fees.

Arm’s business centers on designing chips and licensing the intellectual property to customers, rather than chip manufacturing, for which it relies on partners. The company recorded $2.68 billion of revenue in its last fiscal year, which ended in March, and had $524 million in profit for that period.

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