John McCrank, Paul Sandle

LONDON/NEW YORK – SoftBank’s listing of British chip designer Arm in New York is good news. It is also bad news for London. This decision by SoftBank was the best thing for Japan after its collapsed blockbuster sale (NASDAQ:) to Nvidia.

Arm, the technology that underpins global smartphone manufacturing, will most likely be listed on the Nasdaq. SoftBank’s CEO stated this to indicate the possibility of it being able to access U.S. analysts and investors expertise.

London was hit hard by the move. Arm had been listed on Nasdaq secondary from 1998 to 2016, and then it was purchased by SoftBank for $32billion.

Jay Ritter is an IPO specialist from the University of Florida. He said that although global tech valuations have fallen, it was not impossible to believe that U.S. public and private market investors still understood the value of tech companies and would pay top dollars.

He stated that the reason why so many tech companies are listed on Nasdaq was because they believe U.S. Investors quote-unquote understand technology and will pay more for companies with promising growth prospects.

According to Richard Clode, Janus Henderson Investors, U.S.-listed semiconductor stocks are on a “tremendous” run in recent years. Nvidia led the charge and just passed Meta to be the seventh-largest U.S. corporation by market value.

Nvidia saw its share price rise from $40 billion to $80 billion. This valuation is far higher than what Arm will achieve in the open market.

Clode however stated that America remains the best option.

“Growth semiconductors from the U.S. are now valued at a much higher level than comparable growth franchises in Europe, Asia or Asia such as ASML and TSMC,” he stated.

Clode indicated that after disappointing London listings for Deliveroo’s food delivery service and Alphawave’s, Clode believed it was possible to understand why a U.S. listing would appeal, even if London investors were looking for tech businesses of Arm quality.

The exchange operator announced that Nasdaq was leading U.S.IPOs in 2021 for the third year running. It hosted 752 IPOs and nine of the 10 biggest U.S.-based markets debuts in terms capital raised with $181 billion.

Rivian is an electric-vehicle manufacturer. It raised more than $12 billion during its November listing. This makes it the biggest U.S. IPO. Alibaba (NYSE) Group Holding Ltd 2014 and GlobalFoundries Inc (2014), both chip makers. They raised $2.6 billion.

SoftBank was able to sell Arm, Britain’s tech leader that licenses its processor blueprints for more than 500 companies such as Apple (NASDAQ), Samsung (KS) and Qualcomm (NASDAQ).

This deal was reached days after Britain’s shocking vote to withdraw from the European Union. The government took advantage of it to demonstrate that the country is open to foreign investors.

Britain has since tightened takeover regulations and London has changed its listing rules in an effort to attract tech companies. For example, London allows founders to keep additional voting rights.

Boris Johnson’s spokesperson stated that London enjoyed record IPOs and the UK was still a good place to start a tech company.

Just 1% makes up the tech sector, as opposed to more than 20% in financials or 17% in consumer goods.

Susannah Streeter Senior Investment and Markets Analyst at Hargreaves Lansdown (LON) stated that recent attempts by the UK to improve London’s appeal were not working.

She said that “if UK’s biggest tech firms move to New York from London it will cause a serious blow to London and increase pressure on government officials to implement reforms.”

Hermann Hauser was a cofounder of Arm and said that he wanted to see the company listed on London as it is a strong national champion.

Before it was purchased by SoftBank, Arm had been listed in London twice and New York once. That’s my real hope. If not a London listing is possible, at the very least a dual listing between London & Nasdaq,” he said to Reuters.