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Highlights
- London’s tech ambitions have taken a big blow, with UK tech firm Arm Ltd. heading towards the US market.
- Arm was among the biggest tech firms trading on the LSE for around two decades before it went private in 2016.
London’s tech ambitions could be up for a big blow with the leading UK-based semiconductor and software design company, Arm Ltd., heading towards the US market.
London vs. Nasdaq
Arm Ltd. used to be among the largest tech firms trading on the London Stock Exchange for around two decades before it went private in 2016. The flagship UK chip designer was acquired by the Japanese giant Softbank in a £23 billion deal. Recently, a multibillion-dollar deal between Softbank Group and American tech firm Nvidia was called off due to certain regulatory issues. As per media reports following the collapse of the takeover proposal by Nvidia, SoftBank’s CEO Masayoshi Son has expressed his intention to float the Cambridge-based firm on the tech-heavy Nasdaq.
As Arm is a UK-based company, the UK had been desperate to get it listed at home rather than letting it move away to any other exchange. Though the company belongs to London, concerns have been raised if the London market is deep enough for an IPO of this scale. The concern may be right as the listing of Arm could have been among the biggest IPOs that have taken place in London.
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Impact on the UK
Market experts are of the view that Arm’s move to the US abandoning the UK would put a lot of pressure on the Boris Johnson government to speed up the listing reforms. Of late, the US is becoming a hotspot for the listing of UK firms owing to relatively better valuations and share rules. The UK has been making efforts to attract more firms towards London by changing the listing rules and enhancing the flexibility.
However, the Government’s efforts haven’t paid off yet and London is still struggling to compete with the US markets, which have deeper investor pockets. London has been trying to protect its position as a global financial hub since Brexit, and the US listing of Arm would push it to take sweeping steps immediately in order to protect its status.
In 2021, London was the top IPO venue across Europe despite tough competition from Amsterdam. However, the UK market took a hit last year with some flop IPOs, such as Deliveroo, Wise, and Alphawave IP Group. In general, tech listings in London haven’t been doing very well, and thus, UK tech firms are moving towards the US.
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Bottomline
London’s tech ambitions are hanging in the balance as more and more UK tech firms are getting attracted to the US market. The recent changes made in the listing rules are evidently not enough, and the Government needs to go for deep reforms in the listing regime, as suggested by tech executives and investors.
