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Fears for the London stock exchange are mounting.

 Fears for the Lon­don stock mar­ket are mount­ing after Soft­Bank, and the world's largest build­ing mater­i­als group shunned the City in favour of New York.

Soft­Bank this week rejec­ted a Lon­don list­ing for Cam­bridge-based chip designer Arm des­pite an intense lob­by­ing effort from three suc­cess­ive prime min­is­ters, accord­ing to two people with know­ledge of the dis­cus­sions.

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The decision to con­cen­trate instead on a single New York list­ing will be a per­sonal blow for Prime Min­is­ter Rishi Sunak, who held a meet­ing with Soft­Bank boss Masay­oshi Son and Arm chief exec­ut­ive Rene Haas before Christ­mas to lay out the bene­fits of a UK list­ing.

Cam­bridge­shire said Soft­Bank's decision to list Arm in the US was a «big blow», adding: «It is a major part of our national secur­ity, and a major employer in my con­stitu­ency, but the prob­lem with list­ing over­seas is that where the investors are, the jobs and research often fol­lows. So even the UK gov­ern­ment can­not res­ist the power­ful grav­it­a­tional pull of the US stock mar­kets».

Shares in CRH, which has worked on big con­struc­tion projects across the US, Europe and the UK, jumped as much as 9 per cent as ana­lysts said the group would com­mand a higher valu­ation in New York. Ana­lysts at UBS said a US list­ing could lead to a "mul­tiple re-rat­ing given US peers trade on roughly 25x [price to earn­ings] vs CRH on 13x".

Asked about the move by CRH, David Schwim­mer, chief exec­ut­ive of the Lon­don Stock Exchange Group, said: «If com­pan­ies are going to make decisions when most of their busi­ness is in the US, that sort of is what it is».

The planned exit comes at a dif­fi­cult junc­ture for Lon­don's cap­ital mar­kets, which over the past two dec­ades have failed to attract the biggest tech groups.

Early feed­back from investors was «sup­port­ive», and a US list­ing would yield «long-term stra­tegic and cap­ital mar­ket bene­fits», he added.

This week, the Fin­an­cial Times also repor­ted that Shell's exec­ut­ives explored mov­ing the Anglo-Dutch energy group to the US. The Lon­don mar­ket has recently been hit by a wave of takeovers that has stripped it of com­pan­ies, includ­ing Aveva, Micro Focus and cyber secur­ity com­pany Avast.

While CRH poin­ted to its expand­ing oper­a­tions in Amer­ica, the deeper pool of cap­ital in the US is also a huge draw.

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  1. Jerry3 March 2023 at 13:58

    It's obvious that US capital will always attract many companies there. The question is, how does the UK try to attract companies? They can't just wait to see what the US will do. They need to act and attract companies by offering them reasons to stick around.

    ReplyDelete
  2. M3 March 2023 at 16:01

    After SoftBank more will follow. The London stock exchange will lose a lot of its power if they don't do something "drastic". The UK was fortunate to have a lot of good companies listed but all that is about to change. The US has taken steps to attract and retain business, much more than ever before.

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