(Bloomberg) -- When Masayoshi Son said that Arm Ltd. would go public after a proposed acquisition by Nvidia Corp. fell through, he suggested the initial public offering could end up being a more lucrative outcome for SoftBank Group Corp. It won’t be.

Nvidia had agreed to buy Arm for a combination of cash and stock, which was worth about $40 billion when announced in 2020 and rose to more than $60 billion as the bidder’s shares climbed. SoftBank will struggle to get the original price for Arm in an IPO -- and the Japanese company won’t be able to sell all of its stock.

Arm is months away from an offering, and it hasn’t yet disclosed the kind of detailed financial information that investors will need to see. Still, the company is likely worth $25 billion to $35 billion based on the industry’s valuation metrics and analysts’ early projections. 

“Although who knows what it will fetch, we think even $30 billion could be a stretch,” said Amir Anvarzadeh of Asymmetric Advisors.

SoftBank shares climbed 5.9% in Tokyo Wednesday after the company disclosed a surprise Vision Fund profit and unveiled its roadmap for Arm.

Arm’s revenue for the last 12 months is about $2.6 billion. That would make the company worth about $24 billion if investors value it at the average market capitalization-to-revenue ratio of the Philadelphia Stock Exchange Semiconductor Index. 

The chip designer may well command an above-average valuation given its growing importance in fields like cloud computing and automobiles. Nvidia’s takeover was met with resistance by regulators and customers like Qualcomm Inc. precisely because Arm designs are seen as too valuable for any single market participant to own.

Arm also gets much of its revenue from lucrative royalties. A ratio of 10 to 12 times revenue would give it a valuation of $26 billion to $31 billion.

“Masa was making it more like a roadshow itself, highlighting that this was actually the ideal situation for him,” Jefferies analyst Atul Goyal told Bloomberg Television. “Now, in an IPO process, it’s going to be tricky. This is still a company which has actually lost money in the last three, four years. In the current market situation, trying to get a decent valuation for such assets would be tricky.”

Analyst Mio Kato of LightStream Research said the IPO valuation will depend on the tech-heavy Nasdaq, which has slid of late, and the U.S. Federal Reserve, whose plan to raise interest rates has turned some investors away from technology stocks. 

“There is no guarantee it can fetch $20 billion to $30 billion even,” Kato said. 

SoftBank, which acquired the Arm business for $32 billion, had the potential for a neat profit in the Nvidia deal. The Japanese billionaire has been cashing in his equity stakes so he can make more investments in technology startups.

Arm would have to command a valuation along the lines of industry leaders like Nvidia for the IPO to prove as lucrative as an outright sale. Arm would be valued at $49 billion if it could reach the same market capitalization-to-revenue ratio of Nvidia.

Some analysts are optimistic. Revenue at Arm rose 47% over the first nine months of the fiscal year, a sign of its technology spreading beyond smartphones into automobiles and computers.

Anshel Sag, principal analyst of Moor Insights & Strategy, predicts an Arm valuation “north of $40 billion.”

“If you look at Arm processors, they are starting to eat up the server and PC markets, which simply wasn’t the case two years ago,” he said. “Arm already has many of the world’s leading automotive chip suppliers using its cores for all kinds of applications inside the car.”

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