Mizuho Financial Group Inc. is spearheading the initial public offering (IPO) of Landing Arm Holdings Ltd., marking a significant milestone for the Japanese firm. The deal is seen by many as a reward for Mizuho's decades of loyalty and financial support to SoftBank (TYO: 9984 ) Group Corp., which is selling a stake in chip designer Arm.
The IPO, one of this year's largest, is not only a coup for Mizuho but also a test of its expanding dealmaking capabilities, particularly in the United States. The bank has been bolstering its presence in the U.S. through its New York-based team led by Michal Katz, head of investment and corporate banking. Katz played a crucial role in the Arm deal, according to insiders.
Mizuho, along with Sumitomo Mitsui (NYSE: SMFG ) Financial Group Inc., has been expanding its footprint in the U.S. to access the world's largest fee pool amid a global slump in deals following the pandemic. Alongside Wall Street giants Barclays (LON: BARC ) Plc, Goldman Sachs Group Inc (NYSE: GS )., and JPMorgan Chase & Co. (NYSE: JPM ), Mizuho is tasked with selling the multi-billion dollar IPO to global investors, despite questions over Arm’s valuation.
The bank stands to generate as much as $18.3 million in fees as a lead underwriter on the IPO, based on the $5.2 billion that Arm is seeking to raise. This figure is lower than the $8 billion to $10 billion initially sought.
Mizuho's relationship with SoftBank dates back 41 years when it provided a loan to the start-up. Since then, the bank has been instrumental in financing Son’s ventures, including the acquisitions of Vodafone’s Japanese business in 2006 and Sprint in 2013. Mizuho Bank’s loans to SoftBank stood at ¥608.5 billion at the end of March, the highest among any bank.
The IPO also represents a victory for Mizuho's investment banking operations in the U.S., where CEO Masahiro Kihara has been accelerating growth, notably through the acquisition of boutique mergers advisory firm Greenhill (NYSE: GHL ) & Co. earlier this year.
Mizuho Securities USA has significantly strengthened its institutional securities business in recent years, rivaling Nomura Holdings (NYSE: NMR ) Inc. on Wall Street. The firm's rank among underwriters of U.S. equity and equity-linked offerings this year is 10th, heading for its highest ever annual position.
Japanese banks with smaller roles on the Arm deal include Mitsubishi UFJ (NYSE: MUFG ) Financial Group Inc., Sumitomo Mitsui, Daiwa Securities Group Inc., and Nomura. The success of the IPO could further bolster Mizuho's reputation as a top player in the global financial arena.
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