It is the most eagerly awaited share offering of the year. There was much wailing and gnashing of teeth when the owners of the UK-based chip designer Arm decided to list in the US in preference to London. The chance to add a stock that would easily make it into the FTSE100 top ten was enough to get Rishi Sunak on the case to try and list the business at home and boost London’s moribund new issue market.

He lost. Arm is being touted as a $64bn stock, and the offer process is underway in New York, with a thumping legal document describing the business. To save you having to read it, the boys at Doomberg (A sort of antidote to Bloomberg) have struggled through its 300 pages and unravelled a distinctly odd transaction which is being used to support talk of that market value.

It would mark an impressive gain on the $32bn that the world’s biggest gambler paid seven years ago to take Arm off the London stock market. Masayoshi Son would prefer to be described as a “Japanese billionaire technology entrepreneur, investor and philanthropist” in charge of Softbank, a world-scale technology group.

Recently Son has been playing with the shareholdings in Arm, moving them at an internally-generated value of $64bn for the business. However, that door-stopping document suggests that Arm could be worth a great deal less when it comes to market. As Reuters pointed out: “Scattered throughout the hundreds of pages of Arm’s prospectus are details of the company’s labyrinthine relationship with China, its second-largest market.

Arm China, which contributes a quarter of the group’s sales, is only 47 per cent owned by Arm, and as everyone knows, a Chinese company must obey instructions from the Chinese Communist Party. Chip design and manufacture are highly sensitive businesses in telecoms and defence. Reuters again: Arm China “has a history of late payments and presents ‘significant risks’ to Arm’s business, according to its filing.”

Arm’s business is going well enough, but it is not blowing the doors off like Nvidia. Sales in the last financial year were down marginally, and income fell by a fifth. At $64bn, the shares would stand on 120 times historic earnings. It will take all the persuasive powers, calling in of favours and (sorry) arm-twisting from the 28 banks lined up behind the issue to achieve and sustain that valuation.

Even by the completely-detached-from-reality rating given to glamorous tech stocks in New York, this looks, well, unlikely. As for London missing out, initial public offerings may be the essential new blood for a stock market, but it does that market no good if the transfusion is immediately followed by a haemorrhage of value.

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