SoftBank’s Arm and CRH pick New York listing in a blow to London

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City workers in Paternoster Square, home of the London Stock Exchange headquarters, 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 construction materials group CRH plan to shun London and pursue stock market listings in the US, dealing a blow to the UK’s outlook after Brexit.

The Army said in a statement Friday that it was trying to pursue a US-only enlistment this year. It comes shortly after CRH, one of the FTSE 100The largest companies said they plan to move their main stock market listing to New York.

The news is likely to reinforce fears that the UK stock market is losing out to international competitors.

“After discussions with the British Government and the Financial Conduct Authority over several months, SoftBank and the Army have decided that pursuing the US military-only list in 2023 is the best way forward for the company and to its stakeholders,” Army Chief Rene Haas said in a statement, according to Reuters.

SoftBank did not immediately respond to CNBC’s request for comment.

Arm reportedly did not completely rule out the possibility of a London listing in the future, saying it could consider a subsequent IPO at a later date. He did not provide further details.

The decision comes despite intense lobbying efforts by the British 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 jewel in the crown of the British tech industry.

The company is a dominant force in the semiconductor market, licensing its microchip designs to some of the world’s largest consumer technology manufacturers. In about 95% of smartphones worldwide, including the Apple iPhone, processors are based on an arm.

London has relaxed its listing rules in a bid to attract top global tech companies to go public in the UK There are obstacles, with venture capitalists complaining of a lack of understanding of often loss-making tech ventures .

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“The UK is taking forward ambitious reforms to the rules governing its capital markets, building on our continued success as a leading investment center in Europe, and the second largest globally the world,” said a UK Treasury spokesman.

“We continue to attract some of the world’s most innovative and biggest companies – and given the Army’s commitment to expanding its presence in the UK, driving growth, jobs and investing.”

Earlier this week, UK Investments Minister Dominic Johnson urged companies around the world to consider London for a primary or secondary or dual listing “because we have the investment management talent in London.”

“Yes, the US is the biggest capital market in the world, but London is the biggest international investment market in the world because that’s where the people are and the liquidity is,” Johnson told CNBC’s Karen Tso at Mobile World Congress in Barcelona. Spain. “So, I want everyone to come to the UK, list in London and benefit from our financial services ecosystem.”

‘The benefit of our business’

Arm is not alone in setting sights across the Atlantic. Building materials giant CRH said Thursday it was also pursuing a New York listing for “US equity index inclusion as soon as possible.” “

The company said: “We have now come to the conclusion that a US primary listing would provide CRH with greater commercial, operational and acquisition opportunities, accelerating our successful integrated solutions strategy and delivering even higher levels of maximum profit, output and cash for our shareholders. .”

The group said it will speak to its investors in the coming weeks about why it believes it is “in the best interests of our business and our shareholders” to pursue CRH’s main listing in New York.

CRH, which said it would remain headquartered in Ireland, will give another update in a trading statement on April 26. Shares of the company jumped Thursday after the news.

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Separately, FTSE 100 gambling company Flutter has said it plans to set up 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, the CEO of the British education group Pearson, said on Friday that the company and its board of directors had not aimed to change its list.

“We’re very proud to be part of the FTSE, we’re a long-standing member of the FTSE,” Bird told CNBC’s “Squawk Box Europe.”

Speaking on CNBC’s “Squawk Box Europe” on Thursday, London Stock Exchange Group CEO David Schwimmer said, “There’s no doubt that London is the leading financial center in Europe and I expect it to continue to be so. “

— CNBC’s Ryan Browne contributed to this report.

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