Arm’s £50billion float shelved in tech slump

British technology giant Arm has delayed plans to launch on the London Stock Exchange after shares in the sector plunged and the UK slips into a recession.

The City and politicians had been calling on Arm to float in the capital early next year, with a slated value of more than £50billion.

But volatile trading conditions and the financial woes at its parent group mean that Arm is now expecting the flotation to be later than planned.

The postponement is a major setback for the tech world and for billionaire Masayoshi Son, founder and chief executive at Arm’s Japanese owner SoftBank.

It is also a blow to the UK’s ambitions to become an influential player in the global technology industry.

Chancellor Jeremy Hunt said last week that he wanted to harness Britain’s ‘national genius for innovation’ and turn the country into the ‘world’s next Silicon Valley’.

Arm is the jewel in the crown of the UK tech sector, but it has struggled under Soft Bank’s ownership. There have been intense efforts to persuade the semiconductor and software design giant to float in London – or at least to dual list here and in the US.

Former Prime Minister Boris Johnson intervened in the campaign in an attempt to swing the decision. Talks were briefly reignited by Liz Truss.

Many industry insiders believe the flotation process has been postponed indefinitely.

Ian Thornton, Arm’s head of investor relations, informed the company’s private shareholders of the delay in recent days.

Thornton told investors: ‘Clearly, we want to float as soon as possible. But given the current global economic uncertainty, given the state of financial markets, that’s probably now unlikely to happen before the end of March 2023.

‘However, preparations for the flotation are going very well. They’re advanced. And we are fully committed to floating sometime in 2023.’ The decision follows a poor set of results from Arm in its half year to the end of September. The chip designer reported sales down 6.1 percent to £1.16 billion.

A spokesperson for Arm confirmed last night:[The float] has been pushed back because of the market conditions, particularly in the semiconductor space.’

The issues facing Arm were highlighted by Son’s comments earlier this month that he would step back from running day-to-day operations at SoftBank.

He said: ‘For the next few years, I would like to devote myself to Arm’s next phase of explosive growth.’ He said he would delegate ‘daily management operations to other executives’. There has been speculation that Son, 65, is ill although nothing has been confirmed.

Tech companies have been hammered on global stock markets this year. Shares in Amazon, Google parent Alphabet and Meta have all dived during 2022. All three are in the midst of cost cuts or hiring freezes as they deal with weakening consumer demand, inflationary pressure on costs and tepid advertising revenue. The Office for Budget Responsibility said last week that the UK is already in a recession that will last a year.

A senior technology source with knowledge of the situation at Arm said: ‘Let’s face it, this float is off for next year. Neither Arm nor SoftBank is in good shape and tech stocks have plummeted. Son and SoftBank have a big job on their hands. SoftBank was never the right home for Arm.’

SoftBank acquired Cambridge-based Arm in 2016 when it was delisted from the London Stock Exchange.

A series of failed investments by Son’s SoftBank Vision Fund – owned by SoftBank – leaves Son personally owing the Japanese parent group close to £4.1billion, according to a report last week.

Russ Shaw, founder of Tech London Advocates, said: ‘The investments have been underperforming and [Son’s] reputation has been shot over the past couple of years.’