LSE blames chaos in Downing St for Arm snub

LSE blames chaos in Downing St on Arm snub: London’s bid to court tech giant thwarted by UK having three prime ministers in two months

The London Stock Exchange Group has targeted the government after the failure to bring Arm back to the UK.

According to a source at the exchange, the effort was undermined by the government’s 2022 turmoil.

This resulted in Masayoshi Son, boss of Japanese conglomerate Softbank, owner of the British technology group, announcing in March that they would list it in New York.

The London Stock Exchange played a key role in the negotiations and the listing would have been a much-needed victory for the stock exchange.

But the source said the deal was reversed by the UK having three different prime ministers in the space of two months at the end of last year, a critical period when New York and London were both competing to secure Arm.

In the spotlight: Julia Hoggett, head of the London Stock Exchange, faces questions from MPs today about why Arm shunned the UK market

Clearly, Softbank and advisers around the deal grew frustrated with London’s bid as Boris Johnson’s government (pictured below) collapsed in July.

There followed a period of political stagnation over the summer and then chaos as Liz Truss’ government imploded within weeks.

By the time Rishi Sunak took office in October, it was too late and the bid could not be put on track.

The source said: “The upheaval has cost the bid. Look at the timeline. Softbank and the bankers were fed up. It became chaos. The goodwill between the parties had disappeared. Softbank made the announcement in March, but the decision was made last year.”

The comments come as London Stock Exchange CEO Julia Hoggett is today facing questions from MPs about why Arm was avoiding the UK market and what can be done to boost Britain’s competitiveness.

Under Johnson, the government lobbied hard for Arm to come home – with London fighting for a joint listing alongside New York.

The bid was coordinated by Lord Grimstone, the UK’s Investment Secretary, and Digital Secretary Chris Philp, both of whom were part of Johnson’s team.

They played leading roles in talks with the Japanese technology investor and had done most of the heavy lifting, including flying to Japan regularly to meet with Softbank executives.

Grimstone had been commissioned to work on an unusual joint listing to allow Arm to list equally in London and New York, something that had never been done before.

Grimstone told Son he would talk to US and UK regulators to try and get the unique deal over the line. But Grimstone and Philp had to resign last July when Johnson was ousted.

Son had publicly stated that New York was his preferred destination, but admitted in June that he had received “a strong love call” from London and was open to a UK listing.

A second source working on the deal told the Mail: “It was a unique situation and we had told Masa [Son] that we could make this work.

“There was a real chance that we could have won it.

“But the world is not waiting for a government and by the time Rishi Masa called, the world had moved on. It was a missed opportunity.’

The source added that under Truss the framework was undone and the attempt to list Arm in Britain became chaotic with no one taking responsibility for the float.

He added that while Sunak’s team was more competent, Softbank had already gone too far with New York officials.

Arm’s failure to list on the London Stock Exchange was a blow to the stock market and the government.

It is one of the few UK tech success stories and was FTSE 100 darling before being sold to the Japanese giant in 2016. Under Softbank, however, the company struggled, and sales fell last year due to a dip in license revenue.

Arm will release to great fanfare in the US later this year, in what will likely be one of the biggest floats in 2023.

The decision also put further pressure on the London Stock Exchange after a string of FTSE-listed companies announced they would follow Arm across the Atlantic.

They include building materials giant CRH, gambling company Flutter and educational publisher Pearson.

Lord Grimstone added: ‘London used to be the stock exchange capital of the world – it’s important we recapture it.’