SoftBank-backed chip designer Arm is planning a US-only IPO this year, undermining Rishi Sunak’s goal to make London the first destination for IT business IPOs. This comes as a shocker for the British government as it was expecting that the company would return to the London stock market.
After intense lobbying from successive prime ministers, the Cambridge-based company reiterated its preferred plan of seeking a US-only primary listing later this year.
However, the decision is a setback for London, where Arm was listed for 18 years prior to being acquired by SoftBank in 2016 in a $32B deal that was subject to the least amount of government scrutiny, drawing criticism that it had permitted the acquisition of Britain’s biggest tech success by foreign investors.
According to reports, Prime Minister Rishi Sunak and Arm Chief Executive Rene Haas met at No. 10 Downing Street last month to discuss the listing. Masayoshi Son, founder of SoftBank, is alleged to have joined by video call.
The loss comes in response to the building materials juggernaut CRH, based in Dublin, moving its major listing from London to the United States on Thursday.
Arm develops the chip technology included in almost all smartphones and licences its technology to firms like Apple and Qualcomm.
“After engagement with the British government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a U.S.-only listing of Arm in 2023 is the best path forward for the company and its stakeholders,” Haas said in a statement.
A British government spokesperson said, “The U.K. is taking forward ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s leading hub for investment, and the second largest globally.”
Arm, the world’s largest provider of chip design parts used in goods ranging from cellphones to gaming consoles, has vowed to keep its headquarters, operations, and “material intellectual property” in the United Kingdom.
The company announced plans to expand its British staff and open a new facility in Bristol, England. “Arm is proud of its British heritage, and continues to work with the British government,” the company said. “We will continue to invest and play a significant role in the British tech ecosystem.”
Arm has expanded beyond smartphones into markets like as data centre servers, where its low-power designs help reduce energy use. Its sales increased by 28% in the most recent quarter to $746M, making it one of SoftBank’s few growth areas.
The Japanese company opted to float Arm after a $80B plan to sell the chip designer to rival Nvidia fell down due to antitrust concerns last year.
