Arm’s £50billion float shelved in tech slump

British tech giant Arm has postponed plans to launch on the London Stock Exchange after stocks in the sector plummeted and the UK plunged into recession.

The city and politicians had called for Arm to float in the capital early next year, with a planned value of more than £50bn.

But volatile trading conditions and the parent group’s financial problems mean that Arm now expects the IPO to be later than planned.

The delay is a major setback for the tech world and for billionaire Masayoshi Son, founder and CEO of Arm’s Japanese owner SoftBank.

It is also a blow to the UK’s ambitions to become an influential player in the global tech industry.

Chancellor Jeremy Hunt said last week he wanted to harness Britain’s “national genius for innovation” and make the country “the world’s next Silicon Valley.”

Arm is the jewel in the crown of the UK technology sector, but it has struggled under Soft Bank ownership. Intense efforts have been made to persuade the semiconductor and software design giant to go to London, or at least to a double list here and in the US.

Former Prime Minister Boris Johnson intervened in the campaign in an attempt to change the decision. The talks were briefly revived by Liz Truss.

Many industry insiders believe the IPO process has been postponed indefinitely.

Ian Thornton, Arm’s head of investor relations, informed the company’s private shareholders of the postponement in recent days.

Thornton told investors, “It is clear that we want to go public as soon as possible. But given the current global economic uncertainty, given the state of the financial markets, it is probably unlikely to happen before the end of March 2023.

‘However, the preparations for the IPO are going very well. They are advanced. And we are fully committed to floating sometime in 2023.’ The decision follows Arm’s poor run of results in its six months to the end of September. The chip designer reported a 6.1 percent drop in revenue to £1.16 billion.

A spokesman for Arm confirmed last night: “[The float] has been pushed back due to market conditions, particularly in the semiconductor space.”

The issues Arm faced were highlighted by Son’s comments earlier this month that he would be stepping back to run day-to-day operations at SoftBank.

He said, “I’m eager to devote the next few years to Arm’s next phase of explosive growth.” He said he would delegate “day-to-day management to other executives.” There has been speculation that Son, 65, is ill, although nothing has been confirmed.

Tech companies have been hammered into global stock markets this year. Shares in Amazon, Google parent company Alphabet and Meta are all down in 2022. All three are in the midst of cost cuts or hiring freezes due to declining consumer demand, inflationary cost pressures and lukewarm advertising revenues. The Office for Budget Responsibility said last week that the UK is already in a year-long recession.

A senior technology source with knowledge of the situation at Arm said: ‘Let’s face it, this float is off next year. Neither Arm nor SoftBank is doing well and technology stocks have plummeted. Son and SoftBank have a big job to do. SoftBank was never the right home for Arm.”

SoftBank acquired Cambridge-based Arm in 2016 when it was delisted from the London Stock Exchange.

A series of failed investments by Son’s SoftBank Vision Fund – owned by SoftBank – means Son personally owes nearly £4.1bn to the Japanese parent group, according to a report last week.

Russ Shaw, founder of Tech London Advocates, said: “Investments have underperformed and [Son’s] reputation has shot down in recent years.”