LSE blames chaos in Downing St for Arm snub

The London Stock Exchange Group has taken aim at the Government after the failure to woo Arm back to the UK.

According to a source at the exchange, the effort was undermined because of government upheaval in 2022.

This resulted in Masayoshi Son, boss of Japanese conglomerate Softbank, which owns the British tech group, announcing in March they would list it in New York.

The London Stock Exchange played a key role in the negotiations and the listing would have been a much-needed victory for the bourse.

But the source said the deal was undone by the UK having three different Prime Ministers in the space of two months at the back end of last year, a critical period when New York and London were both vying to secure Arm.

In the spotlight: London Stock Exchange chief exec Julia Hoggett faces questions from MPs today about why Arm shunned the UK market

It is understood Softbank and advisors around the deal became frustrated with London’s bid once the government run by Boris Johnson (pictured below) collapsed in July.

There followed a period of political stagnation over the summer and then chaos as the Liz Truss government imploded within a matter of weeks.

By the time Rishi Sunak took office in October, it was too late and the bid could not be put back on track.

The source said: ‘The upheaval cost the bid. Look at the timeline. Softbank and the bankers got fed up. It became shambolic. The goodwill between the parties had gone. Softbank made the announcement in March but minds were made up last year.’

The comments come as London Stock Exchange chief executive Julia Hoggett faces questions from MPs today about why Arm shunned the UK market and what can be done to boost Britain’s competitiveness.

Under Johnson, the Government lobbied hard for Arm to come home – with London in contention for a joint listing alongside New York.

The bid was being co-ordinated by Lord Grimstone, the UK’s investment minister, and digital minister Chris Philp who were both part of Johnson’s team.

They played leading roles in talks with the Japanese tech investor and had done most of the heavy lifting, including flying regularly to Japan to meet Softbank executives. 

Grimstone had been tasked with working on an unusual joint listing so that Arm could list equally in London and New York, something that had never been done before. 

Grimstone told Son that he would talk to US and UK regulators to try to get the unique deal over the line. But Grimstone and Philp had to resign in last July when Johnson was ousted.

Son had publicly stated that New York was his favoured destination but admitted in June he had received ‘a strong love call’ from London and was open to a UK listing.

A second source who worked on the deal told the Mail: ‘It was a unique situation and we’d told Masa [Son] that we could make this work.

‘There was a real chance we could have got it over the line.

‘But the world doesn’t wait for any government and by the time Rishi made a call to Masa, the world had moved on. It was a missed opportunity.’

The source added that, under Truss, the framework was undone and the bid to get Arm to list in Britain became chaotic with nobody taking responsibility for the float. 

He added that while Sunak’s team was more competent, Softbank had already gone too far down the line with officials from New York.

Arm’s failure to list on the London Stock Exchange was a hammer blow for the exchange and the Government.

It is one of only a handful of British tech success stories and was FTSE 100 darling before it was sold to the Japanese giant in 2016. Under Softbank, however, the company struggled and last year sales fell due to a plunge in licensing revenue.

Arm will list in the US later this year to much fanfare, in what is likely to be one of the biggest floats in 2023. 

The decision also put further pressure on the London Stock Exchange after a string of FTSE-listed companies said they will follow Arm across the Atlantic. 

They include building materials giant CRH, gambling company Flutter and education publishers Pearson.

Lord Grimstone added: ‘London used to be the listing capital of the world – it is important we regain it.’

This post first appeared on Dailymail.co.uk