- Arm said in a statement Friday that it was looking to pursue a U.S.-only listing this year. It comes shortly after CRH, one of the biggest companies on the FTSE 100, said it planned to move its main stock market listing to New York.
- The news is likely to bolster fears that the UK stock market is losing to international rivals.
- “The UK is undertaking ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s largest investment hub and the world’s second largest,” a UK Treasury spokesman said.
City workers in Paternoster Square, home of the London Stock Exchange, in the City of London, UK, Thursday March 2, 2023.
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British chip designer Arm, owned by Japanese SoftBank, and construction materials group CRH intend to avoid London and pursue IPOs in the United States, dealing a blow to the post-Brexit vision of the United Kingdom.
Arm said in a statement Friday that it was looking to pursue a U.S.-only listing this year. It comes shortly after CRH, one of the largest companies on the FTSE 100, announced plans to move its main stock market listing to New York.
The news is likely to bolster fears that the UK stock market is losing to international rivals.
“After engaging with the UK government and the Financial Conduct Authority for several months, SoftBank and Arm have determined that pursuing a US-only listing of Arm in 2023 is the best way forward for the company and its stakeholders,” said Arm CEO Rene Haas. in a statement, according to Reuters.
SoftBank did not immediately respond to a CNBC request for comment.
Arm reportedly hasn’t completely ruled out the possibility of listing in London in the future, saying he may consider a subsequent IPO at a later date. He provided no further details.
The decision comes despite intensive lobbying efforts by the UK government to persuade the chip designer to list its shares in the UK capital. With 6,000 employees worldwide and 3,000 based in the UK, Cambridge-based Arm is widely regarded as the crown jewel of the UK tech industry.
The company is a major force in the semiconductor market, licensing its microchip designs to some of the world’s largest consumer technology manufacturers. Around 95% of smartphones worldwide, including Apple’s iPhone, contain Arm-based processors.
London has relaxed its listing rules in a bid to entice the world’s leading tech companies to go public in the UK. It faces obstacles, with venture capitalists complaining of a lack of understanding of often loss-making tech companies.
“The UK is undertaking ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s largest investment hub and the world’s second largest,” a UK Treasury spokesman said.
“We continue to attract some of the most innovative and important companies in the world – and note Arm’s commitment to expanding its presence in the UK, driving growth, jobs and investment.”
Earlier this week, UK Investment Secretary Dominic Johnson urged companies around the world to consider London for a primary listing or a secondary or dual listing “because we have the investment management talent in London” .
“Yes, the United States is the biggest capital market in the world, but the biggest international investment market in the world is London because that’s where the people are and the liquidity is,” Johnson told CNBC’s Karen Tso at the Mobile World Congress in Barcelona, Spain. “So I call on everyone to come to the UK, register in London and benefit from our financial services ecosystem.”
Arm is not the only one aiming for the transatlantic. Building materials giant CRH said on Thursday it was also pursuing a New York listing for “inclusion in the US stock index as soon as possible.”
The company added, “We have now concluded that a primary listing in the United States would provide further commercial, operational and acquisition opportunities for CRH, further accelerating our successful integrated solutions strategy and delivering even higher levels of higher profitability, returns and liquidity for our shareholders.”
The group said it will speak to its investors in the coming weeks about why it believes “it is in the interests of our business and our shareholders” to pursue a primary listing of CRH in New York.
CRH, which said it would remain based in Ireland, will provide a further update in a trading statement on April 26. Shares of the company jumped on Thursday after the news.
Separately, FTSE 100 gambling company Flutter announced plans to establish a secondary listing in the US, while plumbing and heating products supplier Ferguson moved its primary listing to the US last year. .
However, Andy Bird, CEO of British education group Pearson, said on Friday that the company and its board had no active representation over the change in its listing.
“We’re very proud to be part of the FTSE, we’ve been a very long-standing member of the FTSE,” Bird told CNBC’s “Squawk Box Europe.”
Speaking to CNBC’s “Squawk Box Europe” on Thursday, London Stock Exchange Group CEO David Schwimmer said: “There is really no doubt that London is certainly Europe’s premier financial center and I expect so be it.”
– CNBC’s Ryan Browne contributed to this report.