Instacart raises IPO price range after robust Arm debut

(Reuters) – Grocery delivery app Instacart on Friday raised the proposed price range for its initial public offering, revising its terms to target a fully-diluted valuation of up to $10 billion a day after a smooth debut from Arm Holdings.

The price hike signals robust investor demand for San Francisco-based Instacart, which is looking to finally list its shares this month after years of waiting in the wings.

Shares of SoftBank Group’s chip designer Arm, another major IPO contender that listed on Thursday, rose 34% in premarket trading on Friday after notching a 25% gain on its first day of trading.

September is gearing up to be one of the busiest spells for new listings in recent memory. Shares of Neumora Therapeutics, another portfolio company of SoftBank, are set to start trading on Friday while marketing firm Klaviyo is also looking to list in the next few weeks.

Investors will be pinning hopes on robust debuts from Instacart, Klaviyo and Neumora to carry the momentum in the IPO market after Arm’s strong showing on Thursday.

Instacart said it is now seeking to sell 22 million shares at $28 to $30 each. It was earlier aiming to sell those shares priced between $26 and $28 each.

At the top end of the range, the IPO will fetch $660 million compared with the earlier target of $616 million. The company’s raised valuation target, however, would still be just one-fourth of the $39 billion it was worth after its last funding round more than two years ago.

Cornerstone investors have indicated they will buy up to $400 million worth of shares in the IPO, which would account for around two-thirds of the total proceeds if they were priced at the top end of the range.

PepsiCo has also agreed to buy $175 million of the company’s preferred stock.

Goldman Sachs and J.P. Morgan are the lead underwriters for Instacart’s offering.

(Reporting by Niket Nishant in Bengaluru; Editing by Krishna Chandra Eluri)