ALEX BRUMMER: Arm investors should be prepared for a roller coaster ride

The buzz around this week’s initial public offering (IPO) in New York for Cambridge-based Arm Holdings has been gaining momentum in recent days.

Softbank founder Masayoshi Son may not have proven himself a secure owner of the UK’s most valued tech company.

When it comes to playing the stock markets, he is an expert.

The £40bn company’s aggressive marketing has raised hopes the shares will hit an early premium.

Arm is selling itself not only as an innovative smart chip maker, but also as potentially the next Nvidia, the breakout tech stock of 2023, as the importance of artificial intelligence (AI) to the progress and productivity of the global economy it becomes clear.

The stock’s takeoff has been ensured by a glamorous array of fundamental investors.

These include Nvidia, which was blocked by competition authorities from acquiring Arm, Apple, Google, Samsung, Intel and Taiwanese semiconductor champion TSMC.

The presence of these tech giants on the share registry should ensure Arm’s tech neutrality is maintained and also mean there are lock-up bets should any of these companies fancy their chances of gaining full control.

There has been a lot of excitement in the UK recently about the slow trickle of listings from the City to New York.

Last week, Irish cardboard group Smurfit Kappa revealed it would move its primary listing to Wall Street if it completed its proposed merger with Atlanta competitor WestRock.

However, the performance of US IPOs in recent years has been dismal. The ten largest deals of the past four years have fallen 47 percent from the closing price on the first day of trading.

In fact, only two stocks have maintained high premiums: Montana-based cloud computing platform Snowflake and Airbnb.

Under Softbank’s tutelage, Arm has never made much progress to the top tier of technology.

Investors will almost certainly be wary of the joint venture with China, signed by Softbank boss Son. The boardroom has been a battleground between Beijing and independent directors.

Furthermore, the current growing security concerns over the cyber threat posed by China will undoubtedly cast a dark shadow over the operation.

Investors might also feel they need to be wary of Softbank’s giveaways. A Financial Times analysis found that the average loss on Softbank-backed IPOs is 46 percent.

It would be great if long-term UK investors, who fueled Arm from its inception, got back behind UK technology, helping to make the IPO a global success.

British private investors may be tempted. But in a share register dominated by the giants, it is unlikely that all will be smooth sailing.

Empty glasses

THE last thing the UK needs is more empty High Street outlets. Efforts to save Wilko appear doomed to fail, with 12,500 jobs lost.

The only saving grace is that, although the unemployment rate has increased recently, there are still almost a million vacant positions.

The Restaurant Group’s sale of Frankie & Benny’s and Chiquito restaurants to private equity-backed Big Table also portends more empty sites.

Whether the derelict High Street requires a Royal Commission to put things right is a matter of debate.

The problems at Wilko and elsewhere must ultimately be attributed to careless management and greedy ownership.

One ingredient that could make a real difference on the High Street is civic pride. There is nothing more discouraging than places full of trash and covered in graffiti.

Retail is an organic business. B&M will benefit from Wilko’s demise.

Supermarkets demonstrated that there is demand for local and convenience stores in urban centres.

The rise of bakery chains such as Bain Capital-backed Gail’s shows that with imagination High Street cafes can thrive. There is no substitute for entrepreneurship.

Switched on

Sky is confident that as it bids for the next round of Premier League football rights, the subscription model will remain durable.

It might be comforting to know that the standoff between Disney and US cable service Charter Spectrum, which deprived viewers of access to ESPN sports channels, has been resolved.

As technology and viewing habits change and streaming increases, the future of bundled subscriptions will change dramatically.