Last-ditch bid to float £50bn Arm in London


Last-ditch effort to float £50bn Arm in London: British tech giant may have historic double listing both here and on Wall Street

  • Arm’s owner SoftBank expected to confirm plans when it releases the latest results
  • Float promises to be one of the biggest of 2023
  • There is a major battle going on over whether it will launch in London or New York

British officials are engaged in last-ditch talks to return Arm to the London stock market.

Arm’s Japanese owner SoftBank is expected to confirm its plans for the Cambridge-based chip designer when it publishes its latest results on Tuesday.

The float from Arm, the world’s leading specialist chip designer, promises to be one of the largest by 2023, valued at around $60bn (£50bn). But there is a big battle going on over whether it will launch in London or New York. The London Stock Exchange (LSE) is proposing a unique structure never before used to give Arm equal billing across the city and on Wall Street.

Under the proposed structure, Arm would have a premium listing in the FTSE 100 index of leading stocks and a comparable status in the US Nasdaq technology market.

Until now, companies had joint quotes, but these are organized in such a way that one market takes precedence over the other. An equal listing would be another departure.

Change of direction?: Arm’s Japanese owner SoftBank is expected to confirm its plans for the Cambridge-based chip designer when it publishes its latest results

The LSE argues that the listing in London would attract huge attention due to the lack of high quality technology stocks in Europe. “We are very close to a decision,” said a well-informed source.

Hopes for a listing in London have increased after an intense campaign led by Andrew Griffiths, the city minister, with the personal support of Prime Minister Rishi Sunak.

An announcement about Arm’s fate is expected soon, as banks that loaned it $8bn (£6.6bn) last year are eager to be paid back.

The banking consortium consists of JP Morgan, Barclays, Goldman Sachs and Japanese lender Mizuho. The lenders are all expected to be involved in the float. Despite rising optimism in London, those close to the negotiations say there is still a long chance that a joint par listing will be achieved. While the LSE is far from giving up the ghost, a Nasdaq quote remains the most likely outcome.

SoftBank boss Masayoshi Son has previously said he prefers to list the British company on New York’s Nasdaq market rather than London. But UK government ministers and officials, as well as executives at the LSE, are in talks with SoftBank and Arm in a bid to secure a return to Britain. Chancellor Jeremy Hunt wants Britain to become the European equivalent of Silicon Valley. Securing a listing on the London Stock Exchange for Arm would be a huge feather in his hat.

Arm is the jewel in the crown of the UK technology sector, but it has struggled under SoftBank ownership. A senior source involved in the lobby told The Mail on Sunday: “London’s bid is not dead yet.”

Arm, whose technology powers the global smartphone industry and is used in supercomputers, could be valued at as much as £50 billion.

That would make it one of the largest companies in the FTSE 100 and provide a major boost to the city and the LSE.

A sole listing in New York would be seen as a major setback. Arm was listed in London and New York before being bought by SoftBank of Japan in 2016 for £24 billion. SoftBank’s subsequent plans to sell Arm to US giant Nvidia for £33 billion collapsed last year under scrutiny from regulators. At this point, Son was plotting to float Arm, with New York as a preferred destination.

1675551132 256 Last ditch bid to float 50bn Arm in London

In December, Sunak met Arm CEO Rene Haas in Downing Street, with Son participating via video.

Sunak hopes that the renewed lobbying efforts in London will lead to the British capital at least sharing the listing with New York.

Nevertheless, officials and LSE executives still face an uphill battle to convince SoftBank due to the increased cost and complexity of a dual listing.

The Nasdaq, too, has regained its appeal after a torrid performance in 2022.

The US stock market is up 16 percent so far this year after a 34 percent decline in 2022, with investors betting that rate hikes and inflation will ease as financial conditions improve.

Convincing Arm – which was founded in Cambridge and remains headquartered there – to have a London listing would also be seen as an important vote of confidence in the UK market.

Arm would be the largest technology group on the LSE if it returned to the British capital.

The company is best known for designing chips used in smartphones, but has also expanded to provide designs for cars, data centers and other consumer electronics.