ALEX BRUMMER: Arm investors should be prepared for a roller coaster ride

The hype surrounding this week’s New York initial public offering (IPO) for Cambridge-based Arm Holdings has been building momentum in recent days.

Softbank founder Masayoshi Son may have failed to prove a safe owner of the UK’s most highly valued tech company. 

When it comes to playing the equity markets, he is a dab hand.

Aggressive marketing of the £40billion company has raised hopes that the shares will go to an early premium.

Arm is being sold not just as an innovative smart-chip maker but as potentially the next Nvidia, the star tech share of 2023, as the importance of artificial intelligence (AI) to progress and productivity for the global economy comes into sharp view. 

Salesman: Softbank founder Masayoshi Son (pictured) may have failed to prove a safe owner for Arm, but when it comes to playing the equity markets, he is a dab hand

Lift-off for the shares has been secured through a glamorous array of cornerstone investors. 

These include Nvidia – thwarted from acquiring Arm by the competition authorities – Apple, Google, Samsung, Intel and the Taiwanese semi-conductor champion TSMC.

The presence of these tech behemoths on the share register should ensure that Arm’s tech neutrality is maintained and also mean that there are blocking stakes should any of these enterprises fancy their chances of gaining full control. 

There recently has been much excitement in the UK over a slow drip of listings from the City to New York. 

Last week, the Irish cardboard group Smurfit Kappa disclosed that it would move its main listing to Wall Street should it complete its proposed merger with Atlanta competitor WestRock.

Yet the performance of American IPOs in the past few years has been lamentable. The ten biggest offers of the past four years have dropped 47 per cent from the closing price on the first day of trading. 

Indeed, only two shares have maintained large premiums – the Montana-based cloud computing platform Snowflake and Airbnb. 

Under Softbank tutelage, Arm never really has achieved the great breakthroughs to tech’s top tier. 

Investors will almost certainly be wary of the joint venture with China, signed up to by Softbank boss Son. The boardroom has been a battleground between Beijing and independent directors.

Moreover, current heightened security concerns about the cyber threat posed by China will without doubt cast a dark shadow over the operation.

Investors might also feel they need to be wary of Softbank bearing gifts. An analysis by the FT found that the average loss on Softbank-backed IPOs is 46per cent.

It would be terrific if UK long investors, who nurtured Arm from its earliest days, were to back UK tech again, helping to make the IPO a global success.

British private investors may be tempted. But on a share register dominated by the giants, it is unlikely to be a smooth ride.

Empty vessels

THE last thing the UK needs is more vacant outlets on its High Street. Efforts to save Wilko look doomed, with the loss of 12,500 jobs. 

The only saving grace is that even though the unemployment rate has ticked up recently, there are still almost a million vacancies out there.

Sale of The Restaurant Group’s Frankie & Benny’s and Chiquito eateries to private equity backed Big Table also presages more empty sites. 

Whether the derelict High Street require a Royal Commission to put things right is a matter of debate.

Problems at Wilko and elsewhere must, in the last resort, be placed at the door of inattentive management and greedy ownership.

One ingredient which could make a real difference to the High Street is civic pride. There is nothing more dispiriting than places strewn with litter and covered with graffiti. 

Retailing is an organic enterprise. B&M will benefit from the demise of Wilko. 

Supermarkets demonstrated there is demand for local and convenience stores in urban centres. 

The rise of bakery chains, such as Bain Capital-backed Gail’s, shows with imagination High Street cafes can prosper. There is no substitute for entrepreneurship.

Switching on

Sky is confident that as it makes its bid for the next round of Premier League football rights, the subscription model will remain durable. 

It might draw some comfort from reports that the stand-off between Disney and US Charter Spectrum cable service, which deprived viewers of access to the ESPN sports channels, has been resolved.

As the tech and viewing habits change and streaming ramps up, the future of bundled subscriptions will change dramatically.

This post first appeared on Dailymail.co.uk