Much-anticipated plans to list the British chip designer Arm Ltd on the stock exchange have been delayed by managers who fear the global economic downturn and a slump in tech shares could spook potential investors.
The Cambridge-based company wrote to private shareholders a few days ago, saying the initial public offering (IPO), which could value the company at up to US$40 billion, would not take place until well into next year.
The company was widely expected to float as soon as the first quarter of next year.
The delay would raise anxiety among UK ministers, who have lobbied the company to list on the London Stock Exchange to help secure the city’s reputation as a potential destination for high-profile tech IPOs over rivals.
“Clearly, we want to IPO 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,” Arm’s head of investor relations Ian Thornton told investors.
“However, preparations for the IPO are going very well. They’re advanced. And we are fully committed to floating sometime in 2023,” he added.
A spokesperson for Arm confirmed the delay.
The delay was first reported by the Mail on Sunday.
Analysts have previously estimated that Arm — whose chip designs are used by more than 500 clients, including Apple Inc, Samsung Electronics Co and Google, in products ranging from tablet computers and mobile phones to cars and smart TVs — could be worth up to US$40 billion when it goes public.
However, shares in big tech companies, including Facebook owner Meta Platforms Inc, Google’s parent company Alphabet Inc and Amazon.com Inc have slumped this year, amid fears that surging inflation, rising interest rates and economic uncertainty would hit consumer demand and advertising revenues.
Those same conditions, sparked by Russia’s invasion of Ukraine and a subsequent rise in energy prices, have raised concerns about a global economic downturn. The Office for Budget Responsibility last week said that the UK had already fallen into a recession that would last more than a year, and push half a million people out of work.
The delay to Arm’s IPO plans would put additional pressure on its owner, Softbank Group Corp, which bought the chip company for US$32 billion in 2016, but has suffered from a string of bad investments.
This summer, it emerged that then-British prime minister Boris Johnson joined lobbying efforts already under way by London Stock Exchange executives, government departments and senior officials to try to persuade Arm to float its shares in London.
Liz Truss attempted to revive those discussions before she resigned last month from her short-lived tenure as Johnson’s successor.
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