Will arm go public or not?
Boris Johnson participates in latest attempt to take chipmaker public on London Stock Exchange - government officials fear impact on UK tech sector
Boris Johnson has joined a last-ditch push to persuade chip designer Arm to go public in London, as UK government officials worry about the lasting damage if Britain's best-known tech company chooses New York to go public.
London Stock Exchange ministers and executives have launched a charm offensive to persuade Arm's Japanese owner, SoftBank, to reconsider its strong preference for a listing in New York, the default destination for the world's biggest tech giants.
But even if the UK steps up its efforts, it is clear that the chances of avoiding the New York IPO are slim. SoftBank CEO Masayoshi Son in February described the New York Nasdaq exchange as the "best fit" because it is "at the heart of the global high-tech industry."
The stakes are high for the government, and not just because Arm, which was founded and is headquartered in the UK, was previously listed in London before SoftBank acquired it for £24.6bn in 2016. There are also growing fears that a Wall Street listing would deal a blow to efforts to boost a tech sector in Britain, according to people familiar with the lobbying effort.
"Enormous efforts are being made," said one of the people involved. "They don't get any taller than Arm and it would be a huge blow if they left. It would send a very negative signal if they didn't choose to be listed here.
As part of the latest effort, according to people who those familiar with the matter wrote to SoftBank executives.The lobbying initiatives span a range of departments, including the Department for Digital, Culture, Media and Sport (DCMS), the Treasury Department, the Business Department and Downing
Street Digital Secretary Chris Philp and Gerry Grimstone, the former Barclays chairman who now heads the UK Investment Office, are spearheading the lobbying effort
Philp and Grimstone are expected to meet with SoftBank executives again in the coming weeks, he said two people familiar with the plans, as well as senior executives at the LSE. "There is a political impetus, Arm for London eg u win," said one person familiar with the planned meetings. "The government is trying to boost tech sub-sectors - poor is a very relevant sector and it's also politically sensitive."
Theresa May's government waved the takeover of Arm through in 2016 after SoftBank pledged to keep jobs in the UK amid concerns the UK would lose one of its most valuable corporate crown jewels.
SoftBank is bringing Arm back to the stock market after a proposed $66 billion sale to California-based Nvidia fell through earlier this year after competition officials intervened.
Two people familiar with SoftBank's thinking said it was very unlikely to change plans and go public in London, adding that a listing in New York made more sense as there is a larger one there Number of retail investors resident.
Unlike in 2017, when London controversially offered an overhaul of listing rules to woo Saudi Aramco, regulators say there are no easy changes to arm lure. If the group were listed in London, it would quickly rise to the premium segment of the FTSE 100, where it would be the largest tech company.
This is an argument made by those involved in the lobbying: "In London it would be number 1. In the US there would be much bigger tech companies". They also added that UK investors would give Arm a healthy valuation as an established company rather than a loss-making start-up.
Those involved in the lobbying effort are also considering bringing together UK wealth managers to support the argument. Many London fund managers were investors in Arm when the company was listed in the UK.
Those involved have made it clear that they are fighting for Arm's primary listing and not a secondary listing of the shares, which would exclude Arm from the benchmark FTSE 100 index. "The big difference is the FTSE affiliation. Companies like Verizon and Worldpay have had ADRs [shares tied to a secondary listing] in London, but it's not the same thing.
A government spokesman declined to comment on individual cases, but said : "We want to make the UK the most attractive place for innovative companies to grow and raise capital." SoftBank, Arm and the LSE declined to comment.