SoftBank’s Arm and CRH go for New York itemizing, hitting London

City workers at Paternoster Square, where the headquarters of the London Stock Exchange is located, in the City of London, Britain, on Thursday March 2nd, 2023.

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British chip designer Arm, owned by Japan’s SoftBank, and building materials group CRH intend to avoid London and seek US listings, dealing a blow to Britain’s post-Brexit vision.

Arm said in a statement on Friday that it aims to seek a US-only listing this year. It comes shortly after CRH, one of the FTSE100‘s largest company said it plans to move its primary listing to New York.

The news is likely to add to fears that the UK stock market is losing to international peers.

“After several months of working with the UK Government and the Financial Conduct Authority, SoftBank and Arm have determined that pursuing a US-only listing for 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 CNBC request for comment.

Arm reportedly didn’t completely rule out the possibility of a future listing in London and said it may consider an IPO there at a later date. It did not provide any further details.

The decision comes despite intense lobbying by the British government to persuade the chip designer to list its shares in the British capital. With 6,000 employees worldwide and 3,000 in the UK, the Cambridge-based company is widely regarded as the jewel in the crown of the UK technology industry.

The company is a major force in the semiconductor market, licensing its microchip designs to some of the world’s largest consumer technology manufacturers. Around 95% of smartphones worldwide, including the Apple iPhone, contain Arm-based processors.

London has relaxed its listing rules in a bid to attract leading global technology companies to an IPO in the UK. It faces obstacles as venture capitalists complain of a lack of understanding for often loss-making tech companies.

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

“We continue to attract some of the most innovative and largest companies in the world – and note Arm’s commitment to expanding its presence in the UK to boost growth, jobs and investment.”

Earlier this week, UK Investment Secretary Dominic Johnson urged companies around the world to consider London for either an initial listing or a secondary or secondary listing “because we have the investment management talent in London”.

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

“Best interests of our company”

Arm isn’t the only one targeting the transatlantic. Building materials giant CRH said on Thursday it is also targeting a listing in New York to “be included in the US stock index as soon as possible”.

The company added, “We have now concluded that a U.S. IPO would bring enhanced commercial, operational and acquisition opportunities for CRH, further accelerate our successful integrated solutions strategy and deliver even higher levels of profitability, returns and cash for our shareholders.” .”

The group said it will be speaking to its investors in the coming weeks about why it believes “it is in the best interests of our company and our shareholders” to seek an IPO for CRH in New York.

CRH, which said it would retain its Irish headquarters, will provide another update in a trading statement on April 26. Shares of the company soared Thursday after the news.

Separately, FTSE 100 gaming company Flutter has announced it will establish a secondary listing in the US, while plumbing and heating products supplier Ferguson moved its primary listing to the US last year.

But Andy Bird, CEO of British education group Pearson, said on Friday that the company and its board had had no active reservations about changing its listing.

“We are very proud to be part of the FTSE, we are a very longstanding member of the FTSE,” 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 really no question that London is certainly Europe’s premier financial center and I expect it will remain so. “

— CNBC’s Ryan Browne contributed to this report.

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