Following the collapse of its agreed $66 billion sale to Nvidia on regulatory concerns, SoftBank is to float the British chip designer Arm in an IPO that will return the company to public markets after taking it private in 2016. However, it appears the tech company will not return to the London Stock Exchange where it previously traded alongside a dual listing on the Nasdaq.
Yesterday SoftBank chief executive Masayoshi Son announced that an upcoming Arm IPO would most likely pursue a Nasdaq listing only, with Wall Street considered a friendlier market than London for technology companies. The Japanese technology investor said it plans for the IPO and listing to have gone ahead by March next year.
The rejection of Cambridge-based Arm’s domestic stock exchange will increase the pressure building on the London Stock Exchange Group which runs the exchange and its chief executive, David Schwimmer. The company’s share price has declined by close to 28% over the past 12 months and the number of public companies listed on the exchange is around 40% down on its 2008 peak.
There has been political pressure for SoftBank to opt for a London listing for Arm, at least as one half of a new dual listing, but it would appear Arm’s Japanese owner is prepared to ignore any noise coming out of the UK. Anthony Browne, the Conservative MP for South Cambridgeshire, the constituency that host’s Arm’s headquarters, called a London listing of the company “vital”, continuing:
“Ownership matters, particularly when it comes to such a strategically important company and major employer, and as a nation we have historically been far too casual about such offerings.”
That sentiment attracted cross-party support from the Labour MP for Cambridge, David Zeichner, who added he felt the UK is in sore need of “a concrete policy for keeping strategic assets in the UK and protecting jobs”.
Other voices calling for a dual listing in London included lastminute.com co-founder Brent Hoberman who has advised the government on the digital economy. He recognised that there are obstacles to a primary London listing for Arm, not least the fact it would immediately become one of the largest companies in the FTSE 100 but mainly a perceived lack of understanding of the tech sector among City analysts and investors. Unlike on Wall Street, where the major indices are dominated by the largest technology companies, London is still relatively light on tech representation among its biggest companies.
But Mr Hoberman believes a dual London listing would make sense, saying:
“They [Arm] owe a lot to their Cambridge heritage, they’re still there, and it would also be another argument for them to continue to attract world class talent [because] a UK listing is a prestigious thing to have.”
Outgoing Scottish Mortgage Investment Trust manager James Anderson, the hugely successful tech stock picker and someone who openly opposed the sale of Arm to Softbank back in 2016 said a London listing would place
“a huge burden of proof on management, Board, shareholders and the whole system to show they can handle the significant responsibilities and opportunities.”
Arm employs a total of 6400 staff in mainly highly qualified, well-paid roles. 3300 of those are based in the UK.
The City and government have been on an offensive to attract more high growth technology companies to London rather than New York and recently changed rules on dual-class share structures and free float requirements to that end. Ministers recently met the management of the Swedish buy-now-pay-later fintech Klarna as part of an ongoing campaign to woo British and European technology companies to list in London rather than New York.
