SoftBank (OTCPK:SFTBY) has reportedly halted plans for a London initial public offering of chip design company Arm Holdings (ARMHF) due to the political instability in the UK government, casting doubt on Britain’s status as the Cambridge-based tech giant’s future home. UK Prime Minister Boris Johnson has directly pressed SoftBank’s billionaire founder Masayoshi Son to gain at least a partial listing on the London Stock Exchange for the chip designer.
Investment minister Lord Gerry Grimstone and digital minister Chris Philp resigned as Johnson’s government imploded earlier this month. They had both taken the lead in negotiations with the Japanese IT firm. According to persons briefed on the talks, the withdrawals have caused SoftBank to halt discussions about a UK Arm listing in the coming year. According to the Financial Times, the resignations of a UK investment minister and a digital minister who had played key roles in talks with SoftBank (OTCPK:SFTBY) prompted the Japanese tech investor to call off the talks.
An Arm IPO would be one of the largest-ever tech flotations in London. The political turmoil may pave the door for SoftBank to pursue a more straightforward US IPO, which Son had initially preferred. According to people familiar with the matter, SoftBank was in talks with officials and exchange officials over an extraordinary dual main listing in which it would have floated in New York and London simultaneously.
Companies have hitherto avoided this technique due to the cost and difficulty of effectively running two IPOs concurrently, with prospectus and other regulatory procedures required for both the US Securities and Exchange Commission and the UK’s Financial Conduct Authority. According to two people familiar with SoftBank’s thoughts, work on the London side of the IPO has effectively ceased within the company.
One of these individuals remarked that a London listing appeared less likely than in the past. Given the possibility of higher valuations and deeper pools of investor funds in the US, London has been criticized for being unattractive to fast-growing enterprises. Bankers close to SoftBank have cautioned that the group was only considering a share sale in London because of the strong benefits the UK government gave, which had tasked officials with determining the best terms for the listing, promising to make Arm a national champion for British technology.
According to a source close to the government’s efforts, officials in the Departments of Digital, Culture, Media, and Sport and Business, Energy, and Industrial Strategy are still working on a proposal to attract an Arm listing. They also stated that Philp had been replaced by new digital minister Matt Warman, a former tech writer. Executives at the London Stock Exchange also tried to persuade SoftBank of the UK’s advantages.
Gerry was quite helpful.” Chris Philp was one of the UK officials who resigned after playing a key role in negotiations with the Japanese tech investor. John Phillips/Getty Images Grimstone, who resigned from the cabinet when Johnson indicated he would step down in the coming weeks, led the lobbying efforts as minister for investment, including going to Tokyo to meet Son in person. One City executive with knowledge of the lobbying operations urged the government to step up its efforts, stating, “The main ministers dealing with SoftBank have left.” The schisms within the government have also raised concerns in Whitehall that SoftBank will no longer feel obligated to bring Arm to London markets once political pressure eases.
Work on establishing a dual jurisdiction, according to a source close to the talks with the Arm IPO has reached a “mature” stage in the United Kingdom. This unusual path would allow Arm to be included in indexes in both markets, increasing the number of funds that could invest in the company and allowing it to be fast-tracked into the FTSE 100. According to a UK banker close to Arm, a dual listing would not be “crazy”. Arm used to sell at a tremendous premium in the UK, and when it was listed here, it had a huge fan club, and that group has never found anything else as appealing to acquire.
Can you imagine how delighted [Son] would be if his company became the first to be listed on the FTSE 100 and the S&P 500?” In-depth News Recommendation The ARM Architecture China Arm China’s renegade commander makes his final stand. One possibility is to include a retail offering for the IPO to attract the type of older and wealthier private investors who remember the company’s early days when it branched out of Acorn Computers in Cambridge. SoftBank recently invested in PrimaryBid, a platform that allows retail investors to purchase into IPOs, which one individual suggested could be used to attract private investors to the company in the UK.
Last year, PrimaryBid worked on a British members’ offering for Soho House’s US listing. “A retail sale in the UK would recognize Arm’s special British history, be warmly appreciated by investors, and signal a win for the country,” said Anand Sambasivan, CEO of PrimaryBid. SoftBank and Arm have both declined to comment. Arm has previously stated that it intends to keep its headquarters in the United Kingdom regardless of where it is listed. The UK government did not reply immediately to a request for comment.
Featured Image: Megapixl @ Kritchanut
