Boris Johnson has joined in a last-ditch push to convince chip designer Arm to list in London, as UK government officials worry about lasting damage if Britain’s best-known tech company chooses New York for its initial public offering.
Ministers and London Stock Exchange executives have launched a charm offensive to persuade Arm’s Japanese owner SoftBank to rethink its strong preference for listing in New York, the default destination for the world’s biggest tech groups .
However, even as the UK’s efforts intensify, it is recognized that the chances of snatching the IPO in New York are slim. SoftBank chief executive Masayoshi Son described New York’s Nasdaq stock exchange in February as “the most appropriate” because it is “at the center of global high technology.”
The stakes are high for the government, not just because UK-founded and based Arm was formerly listed in London before SoftBank acquired it for £24.6bn in 2016. There are also fears of more and more that a listing on Wall Street will deal a blow to efforts to foster a tech sector in the UK, according to people familiar with the lobbying effort.
“There’s a tremendous amount of effort being made,” said one of those involved. “They don’t get bigger than Arm and it would be a big blow to take if they left. It would be a very negative signal if they did not choose to register here.
As part of the last ditch effort, Johnson wrote to SoftBank executives, according to people familiar with the matter. Lobbying initiatives span a number of government departments including the Department for Digital, Culture, Media and Sport (DCMS), the Treasury, the Business Department as well as Downing Street.
Digital Minister Chris Philp and Gerry Grimstone, the former chairman of Barclays who now heads the UK Investment Office, are leading the lobbying efforts.
Philp and Grimstone are expected to meet with SoftBank executives again in the coming weeks, according to two people familiar with the plans, alongside LSE executives. “There is political impetus to win Arm for London,” said a person familiar with the planned meetings. “The government is trying to favor technology sub-sectors – Arm is in a very relevant sector and is also politically sensitive.”
Theresa May’s government waved to take control of Arm in 2016 after SoftBank pledged to keep jobs in Britain, despite fears the UK could lose one of its biggest gems. precious.
SoftBank is returning Arm to the public markets after a planned $66 billion sale to California-based Nvidia earlier this year collapsed after antitrust regulators intervened.
Two people familiar with SoftBank’s thinking said there was very little scope to change plans and listing in London, adding that being in New York made more sense because that’s where a greater number of retail investors are based.
Unlike in 2017, when London controversially proposed revising listing rules to woo Saudi Aramco, regulators say there are no easy changes that could lure Arm. Should the group be listed in London, it would be accelerated into the premium segment of the FTSE 100, where it would become the largest technology company.
It’s a point made by those involved in the lobbying effort, with one saying that “in London it would be No. 1. In the United States there would be many big tech companies. They also added that as an established company, rather than a loss-making tech start-up, UK investors would give Arm a healthy valuation.
Those involved in the lobbying efforts are also considering whether to bring together UK asset managers to help make their case. Many London fund managers were investors in Arm when it was listed in the UK.
Those involved made it clear they were fighting for Arm’s primary listing, rather than a secondary stock listing, which would exclude Arm from the flagship FTSE 100 index. “The big difference is being in the FTSE Companies such as Verizon and Worldpay had ADRs [shares tied to a secondary listing] in London but it’s not the same.
A government spokesperson declined to comment on individual cases, but said: ‘We want to make the UK the most attractive place for innovative businesses to grow and raise capital. SoftBank, Arm and the LSE declined to comment.
Additional reporting by James Fontanella-Khan and Anna Gross