Arm listing: Why UK is desperate for Cambridge chipmaker to pick London

CEO of the SoftBank Group Masayoshi Son. SoftBank own ARM
Arm, which focuses on semiconductor and software design, is owned by Japanese multinational conglomerate SoftBank. Photo: Neil Hall/Reuters

British prime minister Liz Truss and chancellor Kwasi Kwarteng are preparing a last-ditch effort to get Cambridge chipmaker Arm Holdings to list in London.

The UK tech firm, which focuses on semiconductor and software design, is owned by Japanese multinational conglomerate SoftBank (9984.T).

The government is set to reignite high-level talks with bosses at SoftBank once the official mourning period for Queen Elizabeth II ends next week, officials have said.

The lobbying effort had been led by Gerry Grimstone, the former investment minister, alongside former prime minister Boris Johnson, before he resigned.

Chris Philp, ex-digital minister, is now working alongside Kwarteng as the chief secretary to the Treasury.

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SoftBank has previously indicated that it wanted to list Arm in New York, which has been the go-to destination for most of the world’s largest tech flotations.

This comes as a major blow to the London Stock Exchange (LSEG.L), which has been struggling to attract initial public offerings (IPOs) in recent years, and instead has been subjected to takeover attempts.

London’s markets have been trailing behind its peers in recent years, struggling to grow big tech businesses that can compete internationally.

Those that have reached significant scale have mostly gone to the US to list shares publicly because of more favourable valuations and share rules there. Between 2015 and 2020, the UK accounted for only 5% of IPOs globally.

To add salt to the wound, Arm was also previously a member of the FTSE 100 (^FTSE) for 18 years before being bought by SoftBank for £24bn in 2016.

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“It is encouraging to see that the new prime minister will be engaging in the UK’s efforts to have Arm list on the London Stock Exchange,” Russ Shaw, founder of Tech London Advocates, told UKTN.

“Overall, this should be seen as positive news for the UK’s technology sector, and an early indication that the prime minister Truss understands the strategic importance of the UK tech and semiconductor sectors.”

Arm licences its technology to companies such as Apple (AAPL), Samsung (005930.KS) and Huawei, powering as many as 95% of premium smartphones across the world.

A London-listing would help to re-energise the City of London as the government looks to revive economic growth and boost confidence in the capital.

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However, in February, Masayoshi Son, chief executive of SoftBank, snubbed the UK by mentioning the Nasdaq (^IXIC) in plans to float Arm after the collapse of a $40bn (£34bn) takeover deal by its California-based rival Nvidia (NVDA).

Later in June, SoftBank indicated that London could still be in the running for the IPO, but that it was still not the “main preference”.

But there have also been discussions about a potential rare dual listing.

A banker involved in the talks told the Financial Times that New York was “the obvious choice”, but that the decision by the American government to block the export of advanced chips by Nvidia to China had caused scrutiny of the regulatory risks of the US.

SoftBank has until Christmas to make a final decision on its flotation plans. It is looking at a stock market debut as soon as the first quarter of next year.

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