LONDON (AFP) – The London stock market and the capital’s wider City financial district have taken a new knock after United Kingdom (UK)-based Arm, a giant of semiconductor design, chose New York for an initial public offering.
The announcement late on Thursday followed news the same day that building materials giant CRH would switch its primary market listing to New York from London, despite UK reforms aimed at attracting IPOs.
The moves are a blow for London’s top-tier FTSE 100 shares index as it seeks to remain a strong global force amid increased competition following Brexit.
Arm, owned by Japanese investment giant SoftBank, reached its decision after months of talks with the UK government and British regulators.
“SoftBank and Arm have determined that pursuing a United States- (US) only listing of Arm in 2023 is the best path forward for the company and its stakeholders,” Arm’s chief executive Rene Haas said in a statement.
Arm said it would “consider a subsequent UK listing in due course”, adding that it plans to increase its British presence with a new site in Bristol, western England, and more staff.
Brushing off news of the US listing, the government in a statement said it continued “to attract some of the most innovative and largest companies in the world – and note Arm’s commitment to expanding its presence in the UK, providing a boost to growth, jobs
and investment”.
DOUBLE BLOW
Analysts described it as a further knock after London already lost its crown as the top European trading centre following Britain’s departure from the European Union.
“It’s been hit by a double blow with both CRH and Arm choosing New York,” said head of money and markets at Hargreaves Lansdown Susannah Streeter.
“The City had been pedalling hard to attract new IPOs with help from the government… but it’s an uphill struggle,” she told AFP.
Chief market analyst at CMC Markets UK Michael Hewson said “it highlights a shift that appears to be taking place about the desirability of the UK as a place to do business”.
The move by Arm, located in the English university city of Cambridge, comes one year after US chip giant Nvidia scrapped a blockbuster USD40 billion takeover of the company following regulatory objections.
SoftBank, which purchased Arm in 2016 for USD32 billion, is now seeking to offload the unit via the initial public offering in the US. Rather than making chips, Arm licences architecture that enables devices to function.
