Truss tries to convince SoftBank to list Arm in London

Prime Minister Liz Truss’ government is planning a new approach to persuade Japan’s SoftBank Group Corp to list Cambridge chip designer Arm on the London Stock Exchange.

As covered by the financial timesLiz Truss and Kwasi Kwarteng will push to hold high-level talks with SoftBank this week after the end of the official mourning period for Queen Elizabeth II.

SoftBank executives have spoken to UK officials about the prospect of a dual listing, but seem even more interested in a single listing in New York.

SoftBank has made no secret of its preference for a listing in New York, where valuations of technology companies are typically the highest in the world.

CEO Masayoshi Son named the Nasdaq exchange earlier this year when discussing SoftBank’s intention to list Arm after a $40 billion (£34 billion) takeover bid by Nvidia fell through.

However, Softbank executives also spoke to UK officials about the possibility of a rare dual listing that would allow the company to have offices in both New York and London.

Son told shareholders in June that he supports a US listing because the majority of Arm’s customers are based there. Since then, the UK government and senior executives at the London Stock Exchange have continued to champion SoftBank.

Former Investment Secretary Gerry Grimstone was responsible for previous lobbying efforts. However, negotiations between the government and SoftBank were halted over the summer after Boris Johnson resigned from his post. Grimstone also left the government following Johnson’s departure.

Chris Philp, the former digital secretary who was also involved in the earlier effort, is now working with Kwarteng as chief secretary of the Treasury.

A source with knowledge of the matter said FT The UK government views the opportunity to secure at least part of Arm’s IPO as a “big and quick win” to show it cares about the future of the City of London.

However, officials warn that time is running out. SoftBank has to decide within the next two months whether to stick with its plan to list Arm publicly, possibly as early as the first quarter of next year.

A source close to SoftBank executives says they are awaiting a fresh attempt by UK officials to persuade them of the benefits of a London listing.

Arm last month reported record earnings for its first fiscal quarter (which ended in June), making it one of the bright spots for SoftBank Group, which reported an unprecedented $23.5 billion loss for the same period.

Arm reported record revenue of $719 million in the first quarter of fiscal 2022, up 6% sequentially.

Rival Nvidia had held talks to acquire the company, but talks collapsed in February this year. Nvidia blamed “significant regulatory challenges that prevented the transaction from completing.”

Nvidia is an ARM licensee, so the proposed deal had raised fears that it might treat itself preferentially. Other licensees feared that the acquisition would affect Arm’s position as a neutral supplier.

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