UK gov makes fresh grab at Arm to list IPO in London

PM reportedly trying to twist CEO's er, arm

The UK government is reported to be trying once again to have the London Stock Exchange play a part in the public offering of chip design company Arm, following delays to the process that are likely to see it go public later this year.

According to the Financial Times, the latest Prime Minister Rishi Sunak hosted Arm chief executive Rene Haas at Downing Street last month in a meeting to discuss the matter, which was joined remotely by Masayoshi Son, the founder and CEO of Arm’s parent company SoftBank.

The renewed lobbying effort is reported to be aiming to get SoftBank to revive plans for Arm to be listed in both London and New York, according to the FT (paywall), which cites anonymous sources it claimed have been briefed on the discussions.

We contacted both Arm and SoftBank to confirm details of the report, but Arm declined to comment and SoftBank had not responded at the time of publication.

The British government has been keen for Arm to be listed on the London Stock Exchange as it views the company as a success story for the country and a poster child for its ambitions to play a larger part in the global technology industry.

Incentives are said to have been offered to SoftBank during the tenure of one of last year’s earlier Prime Ministers, Boris Johnson. However, the lure of easier access to finance and the fact that many of Arm's clients are based in the US made the Nasdaq stock exchange in New York the hot favorite for the post-IPO Arm to be listed.

So keen was the UK government for Arm to be listed on the London Stock Exchange that it was even rumoured at one point to be considering invoking the National Security and Investment Act (NSIA), which came into force at the start of last year, to cajole SoftBank into agreeing.

Despite this, we reported last year that SoftBank was rowing back on plans to list Arm on both the London Stock Exchange and Nasdaq, with New York said to be the preferred option.

However, it was reported in November that the IPO had been delayed until sometime later this year, amid fears that the worsening global economic outlook might make investors reluctant to buy into the company.

SoftBank had originally announced that it planned to conclude the public offering for Arm within the fiscal year ending March 31, 2023, but during SoftBank's Q2 2023 earnings presentation, Arm's head of investor relations, Ian Thornton, said this was "unlikely to happen in this fiscal year" but that the company was fully committed to an IPO happening "sometime in in calendar 2023."

Arm has already cut about 20 percent of its workforce in the UK in preparation for the IPO, following reports last year where the company declared that it needed to slim down its global workforce by between 12 and 15 percent in the wake of the failed sale of the company to US-based GPU giant Nvidia.

Meanwhile, Arm is involved in a damaging legal dispute with Qualcomm, one of its largest customers, over licensing of CPU core designs Qualcomm gained from the acquisition of another chip company, Nuvia.

Despite these problems, Arm reported record royalty revenue of $463.2 million for its quarter ended September 30 last year, up from $378.2 million over the same period in the previous year, although the company's total revenues were down 16 percent. ®