Chip giant Arm snubbed London for a NY listing. But the London Stock Exchange hasn’t given up hope

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Chip giant Arm snubbed London for a NY listing. But the London Stock Exchange hasn’t given up hope

Visitors look out to St. Paul’s Cathedral from a rooftop in the City of London, UK, on Thursday, March 2, 2023.

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British tech darling Arm may be ditching its home turf in favor of New York for its highly-anticipated initial public offering — but the CEO of the London Stock Exchange still hopes the company could opt to list in the U.K. one day.

“There was a difference between the demands of a listed company in the U.K. versus a listed company in the U.S., and that was one of the rationales why ultimately Arm chose to go to the U.S.,” Julia Hoggett told CNBC’s Arjun Kharpal at the Money20/20 fintech conference in Amsterdam on Tuesday.

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Were it not for regulatory differences, Hoggett believes the semiconductor firm would have likely proposed a return to the kind of structure it had before it was acquired by Japan’s SoftBank in 2016 — a London listing and an American Depositary Receipt, allowing its shares to be traded on U.S. exchanges.

Our key competition is with the US,LSE CEO says

“I haven’t lost hope at all that Arm might have a place in the London market as well in the future, and I think we should absolutely fight for great U.K. tech companies to feel that they have a home here,” she said.

“I absolutely know there was strong appetite from investors in the U.K. for Arm. And it was always going to be a both sides of the Atlantic trade. The fact that, actually, the U.S. had to fight as hard as they did to get it, I think illustrates how strong our proposition actually is.”

London reform

Hoggett also addressed the wider debate about whether the London Stock Exchange has failed to modernize in order to pull in the biggest, buzziest companies — and whether it’s seen as an unattractive destination for tech firms.

Following a critical review of the LSE in 2021, the U.K. Financial Conduct Authority proposed a set of reforms, including removing separate ‘premium’ and ‘standard’ listing segments and allowing the dual-class share structures that are popular with some founders but criticised for diluting the power of regular shareholders.

“If you look at the listings that have already happened in London, you take Wise, for example, which is in a similar sector, it’s actually had an incredibly successful listing in London, and is trading at a 50% premium to its U.S.-listed peers,” Hoggett said. “So the idea that you always get an enhanced premium in the U.S. is a misnomer.”

She added that London could also offer access to follow on capital beyond an IPO, and had fallen by less than other jurisdictions on that measure this year.

“We are also going through a radical period of reform in the U.K., which will enable us to have a completely level playing field versus any jurisdiction,” she said, while noting this was not a silver bullet.

“The U.K. has the world’s leading global financial market, it starts more brilliant start-ups and creates more unicorns in any country outside of the U.S., China and India, and it has a deep and liquid pool of capital markets. One of the things we haven’t always done is connect those as well together, and that’s one of the jobs that we’re seeking to do,” Hoggett said.

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