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Arm’s London IPO put on hold following political uncertainty

Arm London
CHIBA, JAPAN - August 29, 2018: Advertsing on the roof of a branch of the Japanese telecommunications company Softbank in Chiba City's Inage area.

Japanese conglomerate SoftBank has put plans to list semiconductor firm Arm on the London Stock Exchange on hold due to the political uncertainty caused by the resignation of Prime Minister Boris Johnson and more than 50 of his MPs.

The government has been working closely with SoftBank management to persuade the tech investor to bring Cambridge-based Arm back to the London markets.

Investment minister Gerry Grimstone and digital minister Chris Philp were said to be key figures in these negotiations, but both are no longer in government following their resignations.

According to the Financial Times, which cited people briefed on the discussions, the political turmoil has led to SoftBank founder Masayoshi Son leaning towards a New York listing – originally his preferred choice.

The decision of what to do with Arm, one of the UK’s biggest tech successes, has been the subject of much wrangling.

Initially, SoftBank tried to sell Arm to US firm Nvidia. However, after the sale was blocked by competition regulators, SoftBank said it would look to bring Arm back to the public markets via an IPO.

A US listing had been thought to be the most likely until the UK government launched a lobbying campaign. Philp previously stated he felt confident in a London listing taking place.

SoftBank had also been weighing up a dual listing for Arm in both London and New York.

A New York IPO could be back on the cards though, as the UK government continues its transition into new leadership.

Earlier this year Son said at a shareholder meeting that New York could offer more for the chip company.

“Stock markets in the US would love to have Arm,” Son commented, despite acknowledging the commitment from the UK.

According to bankers close to SoftBank and cited by the FT, one of the few factors that kept the UK in contention for the public listing was attractive incentives offered by the government.

However, the political turmoil amid the Conservative Party’s search for a new leader has thrown these incentives into uncertainty.

Arm’s co-founder, Hermann Hauser, told UKTN in an interview that the UK government had left it too late to take a stake in Arm, saying its actions were “trying to close the gate after the horse has bolted”.

There has also been concern from the investor community that continued political uncertainty would negatively impact UK tech companies.