SoftBank’s Arm to pursue US-only listing, UK stock market fears grow

Arm, a British chip designer owned by SoftBank of Japan, and CRH, a building materials group, have announced that they intend to pursue stock market listings in the United States, rather than London, which is a setback for the UK’s post-Brexit vision. Arm stated in a press release on Friday that it plans to pursue a US-only listing later this year. This comes shortly after CRH, one of the FTSE 100’s largest companies, revealed that it plans to move its primary stock market listing to New York.

Arm’s CEO, Rene Haas, stated in a release that, following consultations with the British government and the Financial Conduct Authority, SoftBank and Arm have determined that pursuing a US-only listing of Arm in 2023 is the best course of action for the company and its stakeholders. Arm, which is headquartered in Cambridge and has a workforce of 6,000 people worldwide, including 3,000 based in the UK, is widely regarded as the jewel in the crown of the British tech industry. Arm licenses its microchip designs to some of the world’s largest consumer tech manufacturers, and around 95% of smartphones globally, including the Apple iPhone, contain Arm-based processors.

Despite the British government’s intensive lobbying efforts to persuade the chip designer to list its shares in the UK capital, the company did not entirely rule out the possibility of listing in London in the future, stating that it may consider a subsequent IPO there at a later date. However, it did not provide any further information.

London has relaxed its listing regulations in order to attract major global tech firms to go public in the UK, but it faces barriers, with venture capitalists complaining of a lack of understanding of often loss-making tech ventures.

A UK Treasury spokesperson stated, “The UK 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.” The spokesperson added, “We continue 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.”

CRH, which plans to remain headquartered in Ireland, will provide a further update on its trading statement on April 26th. Flutter, a FTSE 100 gambling company, announced that it plans to establish a secondary listing in the US, while Ferguson, a plumbing and heating products supplier, moved its primary listing to the US last year. Pearson, a British education group, has no current plans to change its listing, according to CEO Andy Bird.

David Schwimmer, CEO of the London Stock Exchange Group, stated on Thursday that “There is really no question that London is certainly Europe’s leading financial center and I expect it to continue to be that way.”