The chip maker based in Cambridge, previously a constituent of the FTSE 100 until 2016, is getting ready to go public in New York.
Reports indicate that British technology company Arm, owned by SoftBank, has decided to list its shares in New York rather than London, despite lobbying efforts by UK Chancellor Rishi Sunak to convince the company to go public in Britain.
Arm, which designs microchips used in numerous electronic devices, may consider a secondary listing in London in the future, but will initially only list in New York. The decision comes after a deal for SoftBank to sell the business to US company Nvidia fell through, and SoftBank is now seeking a similar valuation in a public listing.
A company that designs microchips used in smartphones and other electronic devices, was previously listed on the London Stock Exchange before it was acquired by SoftBank for £24bn in 2016. Following the failure of a deal to sell the business to US firm Nvidia last year, the Japanese conglomerate is now preparing to take Arm public. It is expected that SoftBank will aim for a valuation similar to the $40bn (£33bn) that was previously agreed upon with Nvidia.
New York was considered the leading contender to attract Arm, largely due to American investors’ tendency to offer higher valuations to technology firms. SoftBank CEO Masayoshi Son had previously indicated that the Nasdaq, known for its technology-focused listings, was the most probable location for the company’s floatation.
Despite lobbying efforts by UK prime ministers, including the current one, to persuade Son to consider the UK, he had remained non-committal. As recently as last month, SoftBank’s head of investor relations informed shareholders that the Nasdaq, New York Stock Exchange, and London Stock Exchange were being considered, and no decision had yet been made.
Earlier this year, Chancellor Rishi Sunak held a meeting with SoftBank CEO Masayoshi Son and Arm’s CEO Rene Haas at Downing Street. At the meeting, officials proposed a potential dual listing, and representatives from the Financial Conduct Authority were reportedly willing to ease some regulations. However, political instability in Westminster over the past year disrupted efforts to persuade SoftBank.
This decision is considered a setback for the Prime Minister, who, as Chancellor, had also lobbied SoftBank and implemented reforms in London’s stock market to attract high-growth technology companies.
Arm’s current CEO, Rene Haas, who took over from Simon Segars last year, has stated that the company intends to keep its headquarters in Cambridge.
Despite cutting over 1,000 employees last year after the failed Nvidia deal, Arm still has nearly 3,000 workers in the UK, accounting for almost half of its workforce. SoftBank has pushed ahead with plans to list Arm this year, despite the technology market’s quiet market for initial public offerings. Recent rebounds in tech shares, as well as improved trading by Arm itself, may have bolstered SoftBank’s confidence.
Arm’s sales rose by 28% in the last quarter to $746m as its technology was used to ship a record 8 billion microchips. The company is expanding beyond its traditional stronghold in the smartphone market into sectors such as electric cars and data centres.
As part of a consortium, major US technology companies such as chipmaker Qualcomm have indicated that they may invest in Arm when it goes public. Meanwhile, the British microchip firm Imagination Technologies is considering a listing in either the US or the UK.
