City workers at Paternoster Square, home to the headquarters of the London Stock Exchange, in the City of London, UK, on Thursday, March 2, 2023.
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British chip designer Arm, owned by Japan’s SoftBank, and building materials group CRH plan to avoid London and aim for a US stock exchange listing, blowing the UK’s post-Brexit outlook.
Arm said in a statement Friday that it wants to list only in the US this year. It comes shortly after CRH, one of the FTSE 100largest companies, said it plans to move its primary listing to New York.
The news is likely to reinforce fears that the UK stock market will lose out to international rivals.
“After several months of discussions with the UK government and the Financial Conduct Authority, 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 Rene Haas, CEO of Arm. in a statement, according to Reuters.
SoftBank did not immediately respond to a request for comment from CNBC.
Arm reportedly did not completely rule out the possibility of a London listing in the future, saying it could consider another IPO there at a later date. It gave no further details.
The decision comes despite intensive lobbying efforts by the British government to convince the chip designer to list its shares in the British capital. With 6,000 employees worldwide and 3,000 in the UK, Cambridge-based Arm is widely regarded as the jewel in the crown of the UK technology industry.
The company is a major player in the semiconductor market, licensing its microchip designs to some of the world’s largest consumer technology manufacturers. About 95% of smartphones worldwide, including the Apple iPhone, contain Arm-based processors.
London has relaxed its listing rules in a bid to attract leading international tech companies to go public in the UK.
“The UK is undertaking ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s leading hub for investment and the world’s second largest,” said a spokesman for the UK Treasury.
“We continue to attract some of the most innovative and largest companies in the world – noting that Arm is committed to expanding its presence in the UK, boosting 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 US is the largest capital market in the world, but the largest international investment market in the world is London, because that’s where the people and the liquidity are,” Johnson told CNBC’s Karen Tso at Mobile World Congress in Barcelona. Spain. “So I’m calling on everyone to come to the UK, make a list in London and take advantage of our financial services ecosystem.”
“Best Interests of Our Company”
Arm is not the only one with a transatlantic focus. Construction materials giant CRH said Thursday it is also pursuing a listing in New York for “inclusion in the US stock index as soon as possible”.
The company added: “We have now concluded that a US primary listing would provide CRH with increased commercial, operational and acquisition opportunities, further accelerating our successful integrated solutions strategy and delivering even higher levels of profitability, returns and cash for our shareholders would be realized.”
The group said it would talk to its investors in the coming weeks about why it believes it is “in the best interest of our company and our shareholders” to pursue a CRH primary listing in New York.
CRH, which said it would remain headquartered in Ireland, will provide a further update in a trading statement on April 26. Shares of the company rose on Thursday following the news.
Separately, gambling company Flutter on the FTSE 100 has said it plans to set up a secondary listing in the US, while plumbing and heating 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 reservations about changing the listing.
“We are very proud to be part of the FTSE, we have been a member of the FTSE for a very long time,” Bird told CNBC’s “Squawk Box Europe”.
David Schwimmer, CEO of the London Stock Exchange Group, told CNBC’s “Squawk Box Europe” on Thursday: “There is no doubt that London is certainly the leading financial center in Europe and I expect it to continue to be so.”
— CNBC’s Ryan Browne contributed to this report.