Financial red tape blamed for London losing Arm IPO
- Reference: 1678113238
- News link: https://www.theregister.co.uk/2023/03/06/fca_rules_arm_listing/
- Source link:
The chip design outfit [1]announced last week that it had decided to list its shares only on New York's Nasdaq for its IPO, despite efforts by the British government to have it dual-list at the London Stock Exchange because Arm is seen as one of the UK's great technology success stories.
It appears that the finger of blame is being pointed at financial regulations regarding the reporting of related party transactions, which Arm was concerned would require it to report to the FCA on any dealings it had with its parent company SoftBank, or any of the myriad other companies in which SoftBank has a significant stake.
[2]
These rules were regarded by Arm as onerous and are supposed to have been a crucial reason behind Arm's decision, according to a report in the Financial Times citing anonymous sources familiar with the matter.
[3]
[4]
Other reports surfaced [5]last month with a similar story about the rules covering related party transactions. The Guardian newspaper stated that the FCA had taken the unusual step of offering to ease the rules for Arm to smooth the way to a London listing.
However, it appears not to have been enough as one of the FT's anonymous sources claims that the FCA had been "asked to think big but thought small," although the paper goes on to point out that there is a limit to what rules can realistically be waived, especially as many of these regulations have been put in place to protect investors.
[6]Fujitsu's A64FX successor will be an Arm-based datacenter chip
[7]Arm swans off to Nasdaq despite UK gov pleas to IPO in London
[8]Arm co-founder: Britain's chip strat 'couldn't be any worse'
[9]Arm has legs: VMware's Bitnami starts packaging apps for Graviton and Ampere
We asked Arm if it could confirm whether the FCA rules identified had been a factor in its decision, but the company declined to comment.
This is also likely to be only one of the reasons behind Arm's decision to list on the Nasdaq for its IPO, and chief executive Rene Haas said that the company has not ruled out listing on the London Stock Exchange in future.
[10]
Other reasons have been put forward for Arm going cool on the UK, including the government's lack of a [11]coherent technology strategy , and the chaotic political environment over the past year or so, such as the disastrous mini budget during the short-lived premiership of [12]Liz Truss .
Gartner vice president for semiconductors and electronics Richard Gordon [13]told us last week that it was more likely to be about financial market considerations, with easier access to funding for Arm in the US markets.
Arm is likely to aim to raise at least $8 billion from the IPO, according to the latest reports over the weekend. The company is expected to submit paperwork for its initial public offering in late April, but the exact timing of the IPO itself will depend on market conditions.
[14]
According to Reuters, SoftBank has picked four investment banks to oversee the public offering, naming Goldman Sachs, JPMorgan Chase & Co. and Mizuho Financial Group as those expected to take part, although these outfits were [15]identified almost exactly a year ago as those likely to be underwriting the IPO.
Current estimated valuations for Arm vary between $30 billion and $70 billion, as we reported last week, which would make the IPO one of the largest in the US in recent years. ®
Get our [16]Tech Resources
[1] https://www.theregister.com/2023/03/03/arm_nasdaq_listing/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZAYcN1UHml2c4XFEFnY1PAAAAFU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZAYcN1UHml2c4XFEFnY1PAAAAFU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZAYcN1UHml2c4XFEFnY1PAAAAFU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/02/07/arm_revenue_up_28_percent/
[6] https://www.theregister.com/2023/03/06/fujitsus_a64fx_successor_will_be/
[7] https://www.theregister.com/2023/03/03/arm_nasdaq_listing/
[8] https://www.theregister.com/2023/03/02/uk_govt_criticized_arm_founder/
[9] https://www.theregister.com/2023/02/27/bitnami_arm_support/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZAYcN1UHml2c4XFEFnY1PAAAAFU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/03/02/uk_govt_criticized_arm_founder/
[12] https://www.theregister.com/2022/10/20/prime_minister_liz_truss_resigns/
[13] https://www.theregister.com/2023/03/03/arm_nasdaq_listing/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZAYcN1UHml2c4XFEFnY1PAAAAFU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://www.theregister.com/2022/03/25/goldman_sachs_arm_ipo/
[16] https://whitepapers.theregister.com/
Evidently you are not aware that Arm was foreign owned before Brexit.
" It appears that the finger of blame is being pointed at financial regulations regarding the reporting of related party transactions, which Arm was concerned would require it to report to the FCA on any dealings it had with its parent company SoftBank, or any of the myriad other companies in which SoftBank has a significant stake. "
So Arm or probably Softbank didn't want transparency then? Interesting.
Transparency
Either that or rules are incredibly expensive and convoluted.
I don't have a legal and market analysis of these rules at hand, so I can't tell what are the consequences of these rules.
A race to the bottom ?
What happens when too many rules are removed ? Was this not one of the causes of the 2008 crash ?
So are we supposed to ignore history to make a fast buck and just hope that nothing goes wrong ?
Those who lost out after the 2008 meltdown were not the same as those who profited from lax rules beforehand.
The trouble with international competition is that a country's regulators will be under pressure to water down rules, or look the other way, while hoping that other all country's regulators do a good job.
The bind
I wonder how the mental gymnastics will work now. Screeching ARM left due to brexit and we are doomed, or ARM should go because we dont want lax financial rules. Ah forget it the screeching will be the UK is doomed, the conclusion is given regardless of a reason.
whom do the rules benefit?
The faceless and unaccountable mandarins who write and enforce the rules or the people who actually work in the economy?
The leadership is all in the US now and so will much of the flagship development. Having worked there the US workers are absolutely gobsmacked how unproductive the Cambridge site was, so many meetings week in week out and so little getting done outside them. Principal engineers getting paid six figures just to bounce from meeting to meeting talking about processes, standards and committees.
I suppose when most of your revenue comes from royalties on long forgotten IP you can afford to do this, and just hike the price when the IPO is on the horizon.
Something I admire about the USA is the "can do" attitude. There could never be a "silicon valley" in the UK. That's a fact.
There could never be a "silicon valley" in the UK. That's a fact.
Many (if not most) technology ventures fail, but US investors risk huge amount of money hoping that one such venture will take off to such a huge degree that they'll obtain a monopoly and the investors will end up making up for their losses.
Historically our competition watchdog has been reasonable effective at preventing the formation of monopolies, and i'm given to understand that historically, our finance sector has been far more risk adverse about losing large sums of money than the US has been.
Brittania (Doesn't) Waive the Rules [apologies to Budgie]
One reason for the gov't wanting to know about "related transactions" is to ensure the executives don't pull a "shell game", looting assets of one company to prop up a different company.
Re: Brittania (Doesn't) Waive the Rules [apologies to Budgie]
Which was a legit concern re Nvidia and the behind-the-scenes transfer (looting?) of IP
Brrrreeeeeexxsshiiittt
So this topic could be easily reframed that ARM just wants to avoid financial transparency and it actually has nothing to with Brexit.
It implies that remainers are grasping at straws or would love to have financial regulations dropped so that such companies would be welcomed here?
But, but, we're taking back control!