Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

‘’The collapse of the blockbuster Arm deal is a bitter blow of disappointment for Soft Bank, which now faces more of an arduous journey to generate funds.  If it had sold Arm as rumoured for as much as $80 billion had the cash and stocks deal been delivered at the heady heights of Nvidia’s share climb last year, it would have marked a reversal in the dismal fortunes elsewhere in the portfolio where valuations have been hurt hard. It had the rare hallmarks of a SoftBank investment turning to gold, but instead Arm will head back for listing in financial markets where tech stocks have been seriously tarnished of late, and such a bumper valuation is likely to be far from reach.  Given the number of obstacles strewn in the path of SoftBank in its attempts to strike the deal, news that it has called it off comes as little surprise. The highly sensitive nature of the computer chip industry was always going to attract significant scrutiny and concerns competition will be stifled at a time of severe shortages has made regulators more determined to block the deal.

Nvidia saw Arm as an accelerated way to enhance its artificial intelligence prowess but the eye-watering price tag risked being painful if expectations that it would help propel the company right to heart of the AI revolution didn’t work out. So it will have to work harder in this space to stay ahead, but the acquisition of Mellanox and its high performing network technology should help. For now high gross margins have given R&D a hefty budget to work with, which has helped the company throw up fresh innovations particularly in gaming technology, so Nvidia is still in line for metaverse opportunities, without being weighed down by the cost of a blockbuster acquisition.

The British company is set to go public once again, but if, as rumoured Arm reaches for a listing in New York, it may be seen as a vote of no-confidence for London, where newly listed ‘tech’ companies have had a distinctly rocky ride over the past year. Deliveroo’s disastrous IPO did little to inspire optimism, Moonpig has been brought down to earth with a bump and although payments firm WISE got off to a running start with its direct listing, its shares have been on a distinct downwards trajectory since the Autumn. Cyber security Darktrace has also been hit by a fresh jolt of insecurity among investors.

London has been working hard to position itself as a Fintech hub, as the UK continues to grapple with its post-Brexit status, in an era when it has struggled to attract fast growing companies to launch an IPO. The government has begun to make changes to try and make the city more attractive to founder led firms, but it seems these alone aren’t cutting it, with other disappointments popping up, like the decision of GP Bullhound, a venture capital firm to raise money in Amsterdam not London, via a blank cheque company. If the UK’s largest home grown tech firms shuns London for New York it will be a major blow to London’s ambitions and will pile pressure on the government to speed up reforms.’’