Johnson throws weight behind Arm IPO charm offensive
Boris Johnson has thrown his weight behind efforts to woo British chipmaker Arm into floating in London as concerns grow that parent company SoftBank is set to list the Cambridge-headquartered firm in New York.
Ministers and London Stock Exchange bosses have been on a charm offensive in recent months to try and tempt Japanese investment giant SoftBank into floating Arm in the capital, after a blockbuster merger with US rival Nvidia fell through earlier this year.
The prime minister has now written to Softbank bosses in a last ditch effort to persuade the firm to float the firm in London, the Financial Times first reported.
Lobbying efforts for an Arm IPO in London span the tech industry and a range of government departments including Department for Digital, Culture, Media & Sport (DCMS), Treasury, business department as well as Downing Street, with Digital Minister Chris Philp and Gerry Grimstone, the investment minister leading the push.
In an interview with City PM’s Tech Weekly podcast last week, Philp said there was still hope the firm would opt to float in London.
“Arm have said publicly that they are looking at both options,” he said. “I think there is a really strong case for Arm to list in London, and obviously they’re thinking about that themselves.”
Philp added that ministers had “addressed a number of the technical impediments to London listing” with a major review of the UK’s listings regime last year led by Lord Hill.
Philp and Grimstone are both expected to meet SoftBank executives again in the coming weeks, the FT reported, alongside executives from the London Stock Exchange.
Pressure has been building on the government to keep Arm listed in the UK both because of the strategic importance of chip manufacturers amid a global shortage, and due to the fact the firm was previously listed in London before being snapped up by Arm in 2016.
People familiar with the matter told the Financial Times that it remains highly unlikely that SoftBank boss Masayoshi Son is going to change his preference for a New York listing however, having previously publicly backed the idea of floating the firm on the Nasdaq exchange, where tech firms typically fetch a higher valuation.
Son said in a press briefing in February: “The U.S. … that’s the market that we are looking at when it comes to listing Arm, and most likely Nasdaq.”
“But wherever it is, the U.S. is the market that we’re looking at for the listing of Arm.”
Johnson’s involvement in the persuasion efforts to tempt Arm to London comes amid a wider push from ministers to promote London as a destination for tech firms to float, with city Minister John Glen hosting tech and fintech bosses at Downing Street in February in a bid to iron out concerns over London’s appeal as a place to go public.
Among the changes being mulled by government to boost London’s standing are tax incentives to encourage investors to back publicly listed firms, and loosening EU-era MIFID II rules to broaden the remit of research analysts to provide coverage of a wider range of listed firms.
But Stephen Kelly, Chair of industry group Tech Nation, said Arm’s intention to float in New York showed more needs to be done.
“Talks about Arm listing in New York highlight that there is more work that can be done to innovate and align the broad ecosystem to ensure we don’t waste the opportunity that the tech sector offers, to remain competitive, and to ensure these companies stay in the UK,” he said.
“The Lord Hill review provides an excellent start and direction of travel for the UK as a global digital powerhouse, providing speed, reform and simplification of the process, with a healthy balance of safeguards.”
A DCMS spokesperson told City PM that while they did not comment on individual cases, ministers “continue to work hard to support and encourage all firms to list here”.
“We hope Arm will continue to build its business here, drawing on the UK’s unrivalled mix of skills and capital,” they added.
Arm declined to comment on the story, while SoftBank did not immediately respond to City PM’s request for comment.