London dealt a £80bn double blow: Chip designer Arm and building materials giant CRH shun the City for Wall Street listings
London’s status as a top financial centre suffered a double blow yesterday as chip designer Arm and building materials giant CRH both set their sights on listings on Wall Street rather than in the City.
The two global companies, with a combined valuation of more than £80billion, will become the latest to pick America over the UK as the venues for their shares to be traded.
Losing Arm to New York will be a particularly bitter blow after ministers campaigned for the Cambridge firm, whose chips underpin the global smartphone industry, to list in London.
American dreams: Chip designer Arm and building materials giant CRH will become the latest firms to pick America over the UK as the venues for their IPOs
It comes after UK-listed Paddy Power owner Flutter said in February that it was considering an additional listing in America and a report this week that oil giant Shell explored moving to the US before eventually deciding against.
London Stock Exchange group boss David Schwimmer said that, despite reforms to UK financial rules, there was no ‘silver bullet’ to reverse the trend.
Arm’s Japanese owner SoftBank has reportedly chosen to float the company – said to be worth £50billion – solely on Wall Street, snubbing the idea of a dual listing on both sides of the Atlantic.
It has not ruled out the potential for a secondary listing in the future for Arm in the UK, though that is not likely, according to a Bloomberg report. Arm declined to comment.
Irish-based CRH, valued at around £30billion, has been listed in London since 2011. But it is increasingly focused on America, where it has a booming business supplying building materials for major public infrastructure projects such as roads, railways, tunnels and bridges.
The US represents three-quarters of its earnings – expected to rise to 90 per cent in coming years – and executives believe an American listing will make it easier to win publicly-backed contracts and use stock to acquire smaller companies as it expands.
Those close to the company say it is that opportunity which is prompting the switch to New York rather than any shortcomings of the London market.
Yet it will still be seen as part of a stampede across the Atlantic which has seen a series of UK firms from used car dealer Cazoo and electric vehicle company Arrival list in New York.
Tweaks to UK stock market rules and proposed reforms aimed at unleashing vast sums of cash held by the pension industry have apparently not been enough to arrest the trend. Schwimmer said: ‘There’s no one silver bullet in terms of dramatically changing the market environment.
‘There are a number of opportunities to continue to improve the environment.’
Reforms have included allowing dual-class share structures – where some stock owners have a disproportionately higher voting rights than others – as well as a cut in the minimum ‘free float’ requirement for shares.
‘Those are incrementally helpful but on their own they’re not going to be dramatically transformational,’ Schwimmer said.
He insisted that London was ‘the most attractive international financial capital market’.
The comments came as the London Stock Exchange group reported better-than-expected financial results. Schwimmer noted that only 4 per cent of revenues at the group, which also includes a major data and analytics business, were represented by the London Stock Exchange itself.
And he rebutted the suggestion that it might do better by being spun-off, insisting: ‘It is a core part of our business. It’s a great business, we’re very proud of it, we put a lot of resources into it.’
Russ Mould, investment director at AJ Bell, said: ‘Efforts to relax the listing rules to attract more companies to London come across as a bit desperate.
‘It should be a badge of honour to list in the UK, but that reputation is dwindling fast.’
The £18bn tech tycoon pulling all the string
Masayoshi Son, the man pulling the strings over the future of Arm, is one of the world’s most influential – and unpredictable – investors.
Son’s SoftBank conglomerate bought the chip designer – then listed in London – for £24billion in 2016.
He later tried to offload it to America’s Nvidia for £32billion but the deal was called off a year ago amid intense scrutiny from regulators.
Shrewd move: Masayoshi Son listed Arm on the London stock exchange – for £24bn in 2016
That prompted plans to float Arm and a scramble to try to bring it back to London.
Son rose to prominence as an investor in some of the world’s best known tech start-ups including ride-hailing firm Uber.
His most lucrative bet was on Chinese e-commerce firm Alibaba – buying a £17million stake in 2000 that rose in value to £168billion. He has also suffered spectacular flops.
He ploughed more than £15billion into shared workspace firm, WeWork, reportedly sealing his decision on a multi-billion-pound investment after a 12-minute tour of the HQ and a car ride with its founder.
But investors baulked at an attempted £39billion flotation in 2019. Today it is valued at under £700million.
More recently, SoftBank has lost billions as the value of its tech investments fell.