Concerns about the future of London’s stock market have grown after SoftBank and the world’s largest building materials group shunned the City in favor of New York.
SoftBank this week refused to list Cambridge-based chip designer Arm in London, despite vigorous lobbying by three previous British prime ministers, two people familiar with the talks said. rice field. The Japanese group has long viewed a U.S. listing as its best chance to recoup the $32 billion it spent buying Arm in 2016, given that U.S. investors value tech stocks highly. I’ve been thinking.
Arm chief legal officer Spencer Collins notified city minister Andrew Griffith on Wednesday, one of the people said. SoftBank and Arm confirmed the decision late Thursday, saying in a statement that they concluded a U.S.-only listing this year was “the best path forward for the company and its stakeholders.” “Eventually”.
The decision to focus on one preliminary listing in New York comes as a personal touch to Prime Minister Rishi Sunak, who met with SoftBank president Masayoshi Son and Arm chief executive Rene Haas before Christmas to explain the benefits of a London listing. would be a devastating blow.
Arm could be forced to report deals with other SoftBank-backed companies, delayed by rules requiring UK-listed companies to disclose all related-party transactions, the decision said. One person in the know says. The cost and complexity of finding a complete primary list in both countries also contributed to the decision to choose New York, he added.
On Thursday, £30bn building materials giant CRH also planned to move its stake to the US. It expects to generate most of its profits in the United States and benefit from President Joe Biden’s infrastructure investment plans.
Shares of CRH, which has worked on major construction projects in the US, Europe and the UK, jumped as much as 9% as analysts said they would demand a higher valuation in New York. Analysts at UBS said moving the listing to the U.S. “could lead to multiple revaluations given that its U.S. peers trade at about 25x.” [price to earnings] CRH vs. 13x”.
Asked about the CRH move, David Schwimmer, chief executive of the London Stock Exchange Group, said: “If companies make decisions when they do most of their business in the United States, then it’s likely that such decisions will be made.” he said. The planned exit comes at a difficult time for London’s capital markets, which have failed to attract the biggest tech companies in the past two decades. The challenges facing the market have deepened over the past year as a wave of listed groups were acquired.
CRH’s decision follows that of Ferguson, a plumbing and heating supplier formerly known as Wolseley. Ferguson moved the main list to the US last year. Flutter, his FTSE 100 gambling company with an aggressive US presence, plans a secondary listing in New York.
Flutter CEO Peter Jackson told the Financial Times that the company “will consider switching key listings” if the move is approved by 75% of shareholders. Early feedback from the house has been “supportive,” he added, adding that a U.S. listing would bring “long-term strategic and capital market benefits.”
Earlier this week, the FT also reported that Shell management had considered moving its Anglo-Dutch energy group to the United States.
South Cambridgeshire Conservative MP Anthony Brown said many of his voters work for Arm and the company’s decision to go public was a big blow.
“It’s a major part of our national security… but the problem with overseas listings is that where the investors are, the work and research often follow,” he said.
“The government has done its best to get Arm listed in the UK, but it’s about money. Even the UK government can’t resist the strong pull of the US stock market.”
The London market has recently been hit by a wave of acquisitions and private deals that have robbed companies such as Aveva, Micro Focus and cybersecurity firm Avast.
CRH noted its expansion in the US, but the deeper US capital pool is also a big draw. Bloomberg first reported earlier this week that Arm had decided to go public solely in the United States.
With London’s status steadily declining, the UK government has announced a move across banks, insurers, brokers, exchanges and investors, with the aim of redrawing the rules of asset classes from cryptocurrencies to infrastructure. It has come to initiate reforms to protect the future of the City of London. stock.
Additional reporting by Oliver Barnes, Laura Noonan and Nikou Asgari from London
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