Secondary listing in London for ARM Holdings would show up government without a clue

It is a strange world in which securing a secondary stock market listing for a home-grown company can be characterised as a success.

Yet this is what looks set to happen with ARM Holdings, a rarity in being a globally significant tech company birthed and headquartered in the UK.

Having spent the last few years under the ownership of Japanese investor SoftBank, ARM is being lined up for a float, with the Nasdaq the red-hot favourite to emerge as the venue.

That would be a blow to the City of London, the London Stock Exchange and a government keen to sell Britain as a global tech centre (but don’t you dare send any of your immigrants our way unless it’s via Rwanda).

It would also be the second such disappointment in recent history. Vaccitech, which owns the technology behind the made-in-the-UK Oxford-AstraZeneca Covid jab, also headed stateside; that didn’t go particularly well as Vaccitech shares have struggled since their debut, partly as a result of sectoral woes. The Nasdaq’s biotech index has been under a cloud of negative sentiment.

However, while both Vaccitech and ARM operate in different sectors, they’re both “future” companies. And the message from them is the same: London, and Britain, are in the past.

These exciting companies do not see the UK as the place to be.

But with ARM now reportedly considering a secondary listing in London, could this be the start of a fightback?

The government belatedly recognised it had a tech problem and has sought to reform the UK market to make it more attractive. Among the changes: scrapping one share, one vote, allowing founders to keep more control. This is what helped bring Deliveroo to London’s door, although investors were left with indigestion.

Those reforms apparently weren’t enough for ARM, so ministers have been busy knocking on doors and writing letters. The prime minister himself put his name to one.

If reports of a secondary listing in Britain are true, Downing Street will try to claim it as some sort of a victory, but it won’t be.

The clue is in the name: “secondary.” ARM would have a presence on the UK market, but it wouldn’t be eligible for the FTSE 100, it would report results under US rules and it would be governed by America’s listing regime.

Wall Street is where the group will be followed, analysed and discussed. It will be there that its executives go to court investors, deliver results.

If Britain really wants to keep its remaining tech champions, it needs to do a lot more than tweaking listing rules and sending letters.

Tom Tugendhat, a potential Tory leadership contender and current chair of the foreign affairs select committee, recently went so far as to call for the government to take a 25.1 per cent stake in ARM “at the market price” to end its “pass-the-parcel treatment”. (SoftBank had tried to sell to America’s Nvidia until virtually every regulator worth its salt said no.)

From any Tory, let alone one of Tugendhat’s stature, that’s radical thinking indeed. You could almost feel the Treasury shudder.

But while you can file the idea under “blue sky thinking,” his point bears repeating: “Protecting our own interests is not a rejection of free enterprise but a recognition that the world is changing. Providing the security and stability ARM needs to invest for the long term, and protecting its ideas, are matters of vital national interest.”

That isn’t just true of ARM.

If Britain is serious about a hi-tech future, it needs an effective strategy. It must sit down with investors, analysts and tech bosses. It needs to do something it hasn’t been terribly good at: listening.