FTSE 100: SoftBank plots additional London listing for Arm

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Former FTSE 100 firm Arm, was bought by SoftBank in 2016 for $32bn. Photo: Getty
Former FTSE 100 firm Arm, was bought by SoftBank in 2016 for $32bn. Photo: Getty

The UK's tech sector has been given a welcome boost on Wednesday after it emerged that SoftBank (SFTBY) is reportedly planning to list some of its shares in the chip designer Arm in London.

ARM is currently owned by Japanese conglomerate SoftBank, which bought the former FTSE 100 (^FTSE) company for $32bn in 2016 – its largest ever purchase.

The investment business had been preparing an initial public offering (IPO) in New York after a $40bn (£33bn) sale to Nvidia (NVDA) was blocked in September 2020 on national security grounds.

However, SoftBank is now looking at listing some of its stake on the London Stock Exchange (LSEG.L), Bloomberg first reported.

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The move follows pressure from prime minister Boris Johnson and campaigning by chancellor Rishi Sunak to keep the British tech giant on UK soil to prevent the semiconductor business from falling victim to a foreign takeover.

SoftBank founder Masayoshi Son has said he now plans to sell a portion of Arm before the end of the company’s financial year next March, with a mooted price tag of around $60bn.

While the exact size and timing of the stock market float has not yet been revealed, there are currently only a handful of tech firms listed on London's bluechip index, including BAE Systems (BA.L) and Sage Group (SGE.L), and a London listing for on of the UK's largest tech firms would bolster the industry.

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However, even a secondary listing in the UK could come with limitations, including Arm's exclusion from the FTSE 100 index, Bloomberg noted.

Shares in SoftBank rose 1.5% on Wednesday in Tokyo.

"There have been efforts to make the London market a hub for technology companies, a sector which is heavily underrepresented at present,"said Russ Mould, investment director at AJ Bell. "A return for Arm, after a delisting necessitated by the 2016 acquisition of the group by Japan’s Softbank, would represent a baby step in the right direction."

Last month, plans to slash around 340 to 350 Arm jobs in the UK, around a tenth of its 3,560 staff, came to light. Chief executive Rene Haas told staff in March that the business needed to cut jobs to remain competitive and "stop work that is no longer critical to our future success", according to the Telegraph.

Despite this, Arm has enjoyed record profits and sales in its last fiscal year. It reported total revenues were up 35%to $2.7bn in 2021 with strong growth in both royalty and non-royalty revenue and shipped a record 29.2 billion chips.

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Cambridge-based Arm was founded in 1990 and creates microchips, which it licenses to manufacturers. Arm also earns royalties from devices that use chips it has designed. Its processors are used in virtually everything from smartphones to fridges. It claims to be in use in 200 billion devices.

SoftBank Group, founded by Son in 1981, gained popularity as a telecoms and broadband business in Japan in the 1990s and 2000s.

It comes after the Department for Digital Culture Media and Sport announced a new digital strategy to attract and grow businesses on Tuesday. This includes a "digital skills council" to help plug the gap in the tech workforce and a strategy to develop Artificial Intelligence.

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