London IPO better for Arm, says co-founder

Arm’s co-founder believes it would be better off as an independent company listed on the London stock market instead of being taken over by a US rival in a £31billion deal, 

Hermann Hauser, who spun off the Cambridge-based chip designer from Acorn Computers in 1990, told the Mail that Arm could list as a standalone company with some of its largest customers taking stakes. 

His intervention came amid mounting opposition to the takeover by Nvidia. 

Arm is owned by Softbank of Japan, which bought the business in 2016 for £24billion. The proposed sale to Nvidia is being scrutinised by regulators around the world. 

Arm and Nvidia bosses were this month forced to defend the blockbuster chip deal. They argued a share float was not a viable option. In a document submitted to the Competition and Markets Authority, they accused opponents of ‘romanticising Arm’s past’. They added that Arm was not in a fit state to be refloated on the stock market via an initial public offering (IPO). 

Arm chief executive Simon Segars said: ‘We contemplated an IPO but determined that the pressure to deliver short-term revenue growth and profitability would suffocate our ability to invest, expand, move fast and innovate.’ 

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Hauser, 73, dismissed the comments. He said no one is romanticising Arm’s past, pointing out that the company had been a member of the FTSE 100 for 18 years before being bought by Softbank. 

The entrepreneur and tech venture capitalist said: ‘The idea that Arm is underperforming is just not true. Look at its inroads into the data centre market in recent years.’ 

Austrian-born Hauser believes there is now a 50 per cent chance that the deal with Nvidia will collapse after the Government ordered a full blown investigation on competition and national security grounds. 

The Government is set to make a decision in May, while regulators in China, the US and EU are also scrutinising the deal. 

Hauser, one of the best known figures in the Cambridge technology community, said Softbank ‘must be looking at other options’ – and one option is for Arm to come back to London. Customer Qualcomm said in June last year it would be willing to buy a stake in Arm alongside other industry investors if Softbank listed the company on the stock market instead of selling it to Nvidia. Qualcomm chief executive Cristiano Amon said at the time: ‘If Arm has an independent future, I think you will find there is a lot of interest from a lot of the companies within the ecosystem to invest in Arm.’ 

Brokers believe customers including Apple and Taiwan Semiconductor Manufacturing Company – better known as TSMC – would also join Qualcomm.

One broker said: ‘Finding customers to take a stake in Arm would not be difficult. Softbank could sell the majority and keep a minority stake itself. This solution protects Arm’s neutrality and gives Softbank an exit.’ 

Nvidia agreed to buy Cambridge-based Arm from Softbank in September 2020 and wanted to close the deal by March this year. That deadline will not be met.