By Charlie Conchie
The government has come under fire for a failed attempt to woo British chipmaking giant Arm into listing in London after the Cambridge-based firm confirmed it would float in New York on Friday.
The move from Arm has dealt a major blow to the UK’s efforts to promote itself as a premier listing hub and comes despite a major charm offensive from successive British prime ministers and regulatory officials to tempt Arm into an IPO in the capital.
Rishi Sunak had restarted talks with Arm’s owner Softbank in recent months after initial attempts by Boris Johnson and London Stock Exchange officials had proved unsuccessful.
Arm chief Rene Haas said on Friday that after engaging with ministers and the Financial Conduct Authority “over several months”, SoftBank and Arm decided that “pursuing a US-only listing of Arm in 2023 is the best path forward for the company and its stakeholders.”
UK tech leaders described the move as a “significant blow” to the UK’s tech sector and the future of its semiconductor industry, and slammed ministers’ failures to win over the firm.
“Ultimately, this will reinforce valuable lessons. Arm’s decision must be upheld as a case study for the UK Government of how ‘not to do it’,” said Russ Shaw, chief of Tech London Advocates. “Arm’s journey to the NASDAQ was somewhat sealed when it was allowed to be sold to an overseas acquirer back in 2016.”
Shaw added that countries like the US and China that “recognise the strategic value of chip companies would not have allowed such decisions to be made”.
Ian Manocha the chief of London-listed tech firm Gresham Technologies said the decision was proof “government should do more to encourage investment into listed companies as a distinct asset class”.
Ministers and regulators have pushed through a number of reviews of the UK’s capital markets in recent years in a bid to boost the appeal of the UK to tech firms. However, tech firms are still seen to typically fetch higher valuations on New York and tap into a deeper pool of tech investors.
London Stock Exchange chief Julia Hoggett said on Friday Arm’s decision “demonstrates the need for the UK to make rapid progress in its regulatory and market reform agenda, including addressing the amount of risk capital available to drive growth”.
The Financial Times reported on Friday that a key decision maker in the process for Arm had blamed the Financial Conduct Authority for dissuading the firm from a London-listing, citing onerous reporting rules.
Arm’s decision came after a bruising two weeks for London’s markets in which building firm CRH announced it would swap its London listing for New York, and listed events firm Hyve fell into the sights of US private equity.
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