Last-ditch bid to float £50bn Arm in London: UK tech giant may have historic dual listing both here and on Wall Street
- Arm’s owner SoftBank expected to confirm plans when it publishes latest results
- Float promises to be one of the largest of 2023
- There is a major battle over whether it will be floated in London or New York
British officials are locked in last-ditch talks to bring Arm back 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 of Arm, the world’s leading specialist chip designer, promises to be one of the largest of 2023 with a value of around $60 billion (£50 billion). But there is a major battle over whether it will be floated in London or New York. The London Stock Exchange (LSE) is proposing a unique structure that has never been used before to give Arm equal billing in the City and on Wall Street.
Under the proposed structure, Arm would have a premium listing in the FTSE 100 index of leading shares and have a similar status on the Nasdaq technology market in the US.
Until now, companies have had joint listings but these have been organised so one market has primacy over the other. An equal listing would be a new 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 London listing would attract huge attention because of the lack of high quality technology shares in Europe. ‘We are very close to a decision,’ said one well-informed source.
Hopes of landing a London listing have been rising after an intense campaign led by Andrew Griffiths, the City Minister, with the personal backing of Prime Minister Rishi Sunak.
An announcement on Arm’s fate is expected soon because banks which lent it $8 billion (£6.6 billion) last year are keen to be repaid.
The consortium of banks includes JP Morgan, Barclays, Goldman Sachs and Japanese lender Mizuho. The lenders are all expected to be involved in the float. In spite of rising optimism in London, those close to negotiations say it is still a long shot that a joint equal listing will be achieved. Although the LSE has by no means given up the ghost, a Nasdaq quote remains the most likely outcome.
SoftBank boss Masayoshi Son has previously said he favours listing the British company on the Nasdaq market in New York rather than in 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 Europe’s equivalent of Silicon Valley. Securing a London stock market quote for Arm would be a huge feather in his cap.
Arm is the jewel in the crown of the UK tech sector, but it has struggled under the ownership of SoftBank. A senior source involved in the lobbying told The Mail on Sunday: ‘London’s bid is not dead yet.’
Arm, whose technology underpins 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 biggest 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 it was bought by SoftBank of Japan for £24 billion in 2016. SoftBank’s subsequent plans to sell Arm to US giant Nvidia for £33 billion collapsed under scrutiny from regulators last year. At that point, Son hatched plans to float Arm, with New York seen as the favoured destination.
In December, Sunak met Arm chief executive Rene Haas in Downing Street with Son joining via video.
Sunak is hoping the renewed London lobbying effort will mean that the UK capital at the very least shares the listing with New York.
Nevertheless, officials and LSE executives still face an uphill struggle to persuade SoftBank because of the higher cost and complexity of a dual listing.
The Nasdaq has also regained its appeal after a torrid performance in 2022.
The American exchange is up 16 per cent so far this year, having fallen 34 per cent in 2022, with investors betting that interest rate hikes and inflation will start to ease as financial conditions improve.
Convincing Arm – which was founded in Cambridge and retains its headquarters there – to have a listing in London would also be seen as a significant vote of confidence in the UK market.
Arm would be the largest tech group on the LSE if it were to return to the UK capital.
Best known for designing chips used in smartphones, the firm has also expanded to supply designs for cars, data centres and other consumer electronics.