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Political turmoil trashes Softbank’s Arm UK IPO plans

Ministers who championed Johnson-backed deal have quit.

Softbank has halted preparations on an Arm UK IPO because of Westminster’s political turmoil, and may focus only on a US listing, according to the Financial Times.

The Japanese investment giant’s decision to pause work on the London IPO came following the resignation of ministers Lord Gerry Grimstone and Chris Philip, the FT claimed, citing anonymous sources. Both ministers quit as Boris Johnson’s government crumbled earlier this month, and the FT suggested Grimstone in particular was instrumental in pushing the Arm UK IPO forward.

Johnson had personally pushed for a London listing for Arm, and his government was prepared to offer substantial incentives to facilitate it. But any Arm UK IPO would most likely have been done in conjunction with a US listing, which was said to be Softbank founder Masayoshi Son’s preference.

The loss of an Arm UK IPO would mostly be a blow to Britain’s tech prestige, with little likely impact on Arm’s operations in the country. Arm’s headquarters has remained in Cambridge throughout its years of ownership by Softbank, and the company has said it has no plans to move.

But the move comes at a time when the UK’s semiconductor sector is under intense scrutiny, between the government’s stated aim of developing a bigger domestic chip industry, and the more concrete moves by the EU and US to bolster local semiconductor development.

See also: Intel unveils €80bn EU investment — UK misses out

A recent BEIS select committee inquiry’s call for evidence on the UK’s semiconductor industry produced a torrent of criticism of the government’s approach to the sector. Chip makers and academics said the government had no direction, and called out “national security” restrictions as hindering research.

And giving oral evidence to the committee this month, Simon Thomas, the CEO of Cambridgeshire startup Paragraf, said the UK’s Department of International Trade had encouraged the firm to move some production to Malaysia. “There’s such mixed signals about what we can and can’t do in the UK,” said Thomas.

See also: UK gov pushed British chip startup to move production to Malaysia, says CEO

According to the FT, all hope of an Arm UK IPO is not lost, as there are suggestions the company’s relisting on the London Stock Exchange would be greeted enthusiastically by investors. Some sources suggested the prestige of having a listing in both the FTSE 100 and S&P 500 could also be attractive to Softbank’s Son.

But the additional cost and complexity of working on an Arm UK IPO alongside a US listing makes it likely the British side will be abandoned, unless the current interim government can keep the pressure on Softbank and provide the necessary incentives.

Softbank has faced a difficult year, shedding $60 billion in value over the last 12 months, coming after a period when investments in firms such as WeWork and Uber plummeted in value. But Son has been reported to be optimistic, and looking at the long term.

Arm declined to comment for this article. Softbank and the British government have been approached for comment.

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