SoftBank has suspended plans for an initial public offering of Arm in London due to political unrest in the UK government, casting doubt on Britain’s place as the future home of the London-based tech giant. Cambridge.
British Prime Minister Boris Johnson has personally lobbied billionaire SoftBank founder Masayoshi Son to secure at least a partial listing of the chip designer on the London Stock Exchange.
As Johnson’s government crumbled earlier this month, Investment Minister Lord Gerry Grimstone and Digital Minister Chris Philp resigned. They had both been prominent in discussions with the Japanese tech investor.
The departures led SoftBank to suspend talks on a UK listing of Arm next year, according to people briefed on the talks. An IPO of Arm would be one of the largest tech IPOs ever in the London market.
The political upheaval could pave the way for SoftBank to pursue a simpler U.S. listing, which Son initially favored.
SoftBank was in talks with officials and exchange executives about an unusual dual primary listing, in which it would float simultaneously in New York and London, according to people with knowledge of the situation.
Companies have avoided this approach in the past due to the cost and complexity of having to execute two IPOs simultaneously, with a prospectus and other regulatory requirements needed for both the US Securities and Exchange Commission. United Kingdom and the Financial Conduct Authority of the United Kingdom.
Two people familiar with SoftBank’s thinking said work on the London side of the IPO has effectively stopped within the company. One such person added that a listing in London seemed less likely than in the past.
Bankers close to SoftBank have warned that the group is only considering a London share sale because of strong incentives offered by the UK government, which has tasked officials with putting in place the right terms for listing , promising to make Arm a national champion for Britain. technology.
London has been criticized for being unattractive to fast-growing companies given the potential for higher valuations and larger reserves of cash for investors in the United States.
Officials from the Department of Digital, Culture, Media and Sport and the Department of Business, Energy and Industrial Strategy are still working on a package to attract an Arm listing, according to a person familiar with the efforts of the government.
Philp had been replaced by new digital minister Matt Warman, a former tech journalist, they added. The leaders of the London Stock Exchange were also trying to convince SoftBank of the merits of the United Kingdom.
Grimstone, who quit government after Johnson announced he would make way for a new prime minister in the coming weeks, led lobbying efforts as investment minister, including flying to Tokyo to personally meet Son.
A city leader close to the lobbying efforts urged the government to step up its efforts, saying: “Key ministers who deal with SoftBank are gone. Gerry was instrumental.
The rifts in government have also raised fears within Whitehall that SoftBank will no longer feel compelled to bring Arm to London markets as political pressure eases over the summer months.
“It’s a concern now that Gerry is gone,” an official said. “There is a void right now and [SoftBank] never really wanted to do it anyway; they just wanted to play ball with the British government.
Work on a dual jurisdiction Arm IPO had reached a “mature” stage in the UK, an official close to the talks said. The unusual route would mean Arm could be included in the index in both markets, increasing the number of funds that can invest in the company, and mean it would be accelerated into the FTSE 100.
A UK banker close to Arm said a dual listing wouldn’t be “crazy”.
“Arm used to trade at a huge premium in the UK and had a huge fan base when it was listed here, and this group has never found anything else so attractive to buy . The very first company to feature in the FTSE 100 and S&P 500 – can you imagine how [Son] would be?”
One option would be to include a retail offering for the IPO to appeal to the type of older, wealthier private investors who remember the company’s early days when it spun off. ‘Acorn Computers in Cambridge.
SoftBank had recently invested in PrimaryBid, which provides a platform for retail investors to subscribe to IPOs, which one person said could be used as a way to attract private investors to the company in the UK. Last year, PrimaryBid worked on a UK member bid for the US listing of private club Soho House.
Anand Sambasivan, Managing Director of PrimaryBid, said: “A UK retail offering would recognize Arm’s distinctive British history, be welcomed by investors and represent a win for the country.”
SoftBank and Arm declined to comment. Arm has previously said it plans to keep its UK headquarters regardless of location.
The British government did not immediately respond to a request for comment.