Arm is the UK’s largest chip designer with a valuation of around $60 billion, providing chips to the likes of Intel, Apple and Samsung. The company was acquired by SoftBank for $32 billion in 2016 and has grown exponentially ever since, even during the semiconductor shortage. This growth made Arm’s core investors like SoftBank want to exit. Arm was to be acquired by Nvidia for $75 billion in 2020; however, the deal fell through and Arm now aims to become public.
Arm was founded by Robin Saxby and Mike Muller in the UK and has its headquarters in Cambridge. The company was listed in London before being acquired, with a secondary listing in New York. However, when SoftBank acquired Arm in 2016 they immediately took the company private as the turmoil created by Brexit was lowering investor confidence.
SoftBank originally wanted Arm to list in New York on the NASDAQ. This was because Masayoshi Son, the founder of SoftBank, believed that the US would offer attractive valuations and a deep investor base. It was even speculated at one point that Goldman Sachs was going to undertake the IPO and had already begun the initial formalities for listing in New York. Despite this, the ongoing lobbying effort led by Prime Minister Rishi Sunak may change this plan.
The UK’s Approach
The UK had already made an attempt at lobbying last year. However, turmoil over Liz Truss’ position completely derailed the effort to create a dual listing on the LSE and NASDAQ. Most recently however, Rishi Sunak has revived efforts and has begun talks with Arm’s management and legal team. Sunak’s most recent meeting happened last month and saw a positive response from SoftBank.
Now Sunak is frantically seeking SoftBank to list in London as investor confidence is at an all-time low. This is as a result of high inflation and a rise in the cost of living prompted by poor decisions last year by Liz Truss’ cabinet. How soon Sunak can convince Arm is also a major question. This is because the pressure for Arm to become public has eased now and they intend to do so later this year.
Whether Rishi Sunak’s lobbying effort is successful is something we investors will need to wait and see. However, analysts are skeptical that this listing will actually happen, given the current economic climate in the UK where inflation is at an all time high and the volumes traded at the LSE are far lower than last year. However, it is that the UK is bullish and PM Rishi Sunak wants to steer out of this recession by boosting investor confidence in the market.