3rd Mar 2023 11:45
(Alliance News) - In the latest blow to London's equities, Arm Ltd, the Cambridge, England-based computer chip designer owned by Japan's SoftBank Group Corp has ruled out a UK listing this year, the company confirmed on Friday.
Arm Chief Executive Officer Rene Haas said a UK listing was not on the cards, opting to float only in New York.
"After engagement with the British Government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a US-only listing of Arm in 2023 is the best path forward for the company and its stakeholders," Haas said.
Bloomberg on Friday reported global investment banks are pitching a sprawling valuation range between USD30 billion and USD70 billion.
The snub from Arm is a blow to the UK government, who had been courting the firm to try and secure a London listing.
The Financial Times in January reported UK Prime Minister Rishi Sunak had doubled down on his efforts to secure London a role in the planned IPO of Arm. Sunak met Arm CEO Haas in December, with SoftBank founder Masayoshi Son joining in a call via video, according to the FT.
Arm was a FTSE 100 index constituent in London before being acquired by Tokyo-based Softbank for GBP24.3 billion in 2016.
However, according to an FT source, Arm was discouraged from listing in the UK due to requirements for UK-listed firms to disclose all related-party transactions. This could potentially entail Arm having to report any companies SoftBank has a stake in.
The news is another knock to London's large-cap index, after Thursday's news that CRH PLC is planning to move its primary listing to the US.
The building materials firm said this would provide it with "increased commercial, operational and acquisition opportunities".
Plumbing and heating products supplier Ferguson PLC and miner BHP Group Ltd have made similar moves. In addition, last month Paddy Power-owner Flutter Entertainment PLC said it is considering an additional US listing.
"While the FTSE 100 enjoyed relative resilience last year partly because of its lack of technology giants, allowing it to avoid the 'tech-wreck', this has also long been a criticism of the UK blue chip index which has struggled to attract key behemoths in the sector," said interactive investor's Victoria Scholar.
In 2022, New York's tech-heavy Nasdaq dropped by a third, in the face of chunky interest rate hikes by the Federal Reserve.
In contrast, the FTSE 100 outperformed, falling just 0.7%, benefitting from a heavier weighting of certain sectors. In particular oil and gas, with BP PLC and Shell PLC adding a third to their respective valuations.
However, the UK lags behind in terms of tech listings, with Scholar pointing to some "high profile disasters" such as food delivery firm Deliveroo PLC and online retailer THG PLC.
Since listing in London, their shares have fallen in value by around 70% and 90% respectively.
"Arm's abandonment of London is another kick in the teeth for the Square Mile's attractiveness among international investors as a go-to destination for technology giants," Scholar concluded.
By Elizabeth Winter, Alliance News senior markets reporter
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