Turmoil? What turmoil? The London stock markets are holding up well, robust enough for GSK to float Haleon, one of the world’s biggest companies, on the stock exchange for £30billion on Monday, without any hiccups.
Sure, there was a small downtick in the price but, as with all floats, the shares will take some time to settle down.
The pound is recovering against the dollar while employment has jumped again, vacancies are at a record high and unemployment is unchanged at 3.8 per cent.
Backing out? SoftBank’s Masayoshi Son (pictured) is holding off on plans to float Arm in the City citing the political turmoil prompted by Boris Johnson’s resignation
Despite the hype surrounding the race to replace Boris Johnson as Prime Minister, the Government still has a big majority and we will have a new PM by September.
Whoever takes over from Johnson will face tough challenges, with soaring inflation, higher energy prices and interest rates, but no more so than the US and most of the eurozone.
Why then is Softbank so dramatically citing ‘political turmoil’ in the UK as the reason for pausing its float of Arm on the London exchange?
Apparently, Softbank’s boss Masayoshi Son is holding off on plans to float the Cambridge-based chip designer in the City because of the turmoil prompted by Johnson’s resignation and the departure of two advisers, investment minister Lord Grimstone and digital minister Chris Philp.
Both were intimately involved in the listing negotiations and helped with the PM’s love-bombing of Son.
Call me cynical, but there is something about this explanation which doesn’t feel right. Softbank was always determined to float in New York. It never wanted to go ahead with a dual listing in London.
But following determined campaigning from one of Arm’s founders, Hermann Hauser, Number 10 took up the cause.
Since then, ministers have gone out of their way to persuade Softbank to go for at least a partial listing in London.
There has even been talk about UK plc taking a golden share, as well as a retail offer to investors to create more fizz.
Such a dual listing would mean Arm – which was listed on the FTSE 100 before and traded at a big premium before being bought by Softbank – would also be listed on the S&P 500 index, giving a boost to the number of funds wanting to invest. Interestingly, Arm also used to have a dual listing on Nasdaq, so it can be done.
Reading between the lines, Softbank’s advisers have been laying it on thick that London is not attractive for fast-growing companies because of the deeper liquidity in the US and higher multiples.
Have they seen what’s happened to the US tech sector recently? Turn the argument around. The more companies like Arm list in London, the more the big tech investors will follow.
Which is why Softbank’s excuse smacks of a negotiating ploy to get more blood out of Number 10 to come up with a juicier package to hook Arm into the capital. Listing in two financial centres obviously increases the prospectus costs, as Arm would have to clear hurdles with the US and the UK regulators.
In this era of data exchange, surely there must be ways of reducing the burden and costs? Isn’t that the point of having global advisers?
Whoever makes it to Number 10 must bring Philp and Grimstone back into the game, and do what it takes to list Arm in London and keep its HQ in Silicon Fen.
Promoting growth and innovation is what all the candidates have been arguing about, so championing a great British success story is a no-brainer. Time to show, not tell.
Back to basics
Made.com has issued its third profit warning in a year with losses likely to be as high as £70million this year.
The online furniture retailer is looking to slash its workforce and may tap investors – who have seen shares trashed by nearly 90 per cent since listing – for cash.
It’s always sad to see a young company go through such troubles yet Made’s problems come as no surprise. Its designer sofas, tables and chairs are smart but expensive for what they are.
They don’t quite sit at the cheaper end of the market, dominated by Ikea and Wayfair, and are not quite chichi enough to compete with Heal’s.
So when the crunch comes, as it has done since the pandemic with the cost of living rising, it’s been squeezed out of the middle.
And badly so. Sales fell by nearly a fifth in the first half. Before shareholders even consider putting up more money, Made needs to go back to basics, take another look at who its customers really are and review its pricing policy.
