In truth, it was always highly unlikely that Arm would list in London. From the moment a proposed takeover by Nvidia collapsed, any other result other than a Wall Street debut was almost a non-starter. But the British firm’s decision to cross the Atlantic for a public offering should not be ignored just because it isn’t much of a surprise.
The sad fact is that when it comes to high-end tech IPOs, London right now cannot compete with New York. A host of recent dud floats haven’t helped shift the perception that London undervalues tech firms. Ask some CEOs – either listed or pondering – and they simply don’t believe that the capital right now has the ecosystem, from thoughtful analysts to longer-term investment capital, to sustain the most technologically advanced firms on its public markets.
Addressing this won’t be easy; it, of course, isn’t just tech firms which appear undervalued. London-listed firms lag, badly, on price to earning ratios compared to international competitors and, as we now know, the weakness of sterling on top makes listing in London a risky enterprise should US private equity firms come calling.
Chief amongst the moves to remedy this must be for government and regulators to move further and faster with the implementation of two vital reviews; the Hill Review into listing rules, and the Kalifa review into the future of fintech. The recommendations therein are far from silver bullets, but the alternative – for them to gather dust on the shelf – would be to waste an awful lot of hard work, and good ideas. They have thus far been held up by political instability; with that in theory in the past, it is high time that we start to see more aggressive action to ensure London remains an attractive destination to list.