Yahoo Finance Fresh blow for the City of London as British Apple supplier snubs LSE
The London Stock Exchange has suffered a new blow after the British microchip company Imagination Technologies snubbed the City in favour of a Wall Street IPO.
Imagination has confidentially registered to go public in New York, six years after it was taken off the London Stock Exchange and sold to a Chinese-backed fund, the Telegraph can reveal.
Preparations to go public come after the microchip giant Arm pulled off a $54bn (£43bn) float last week, after opting for New York’s Nasdaq exchange over London.
Imagination is likely to be valued well above the £550m it was bought for in 2017 and could pursue a flotation as early as this year, although 2024 is seen as more likely. It is working with banks including Barclays on the deal.
The company had been weighing up London and New York as it worked with advisers on a flotation in 2021, before a slump in technology valuations and a barren IPO market led it to suspend plans.
Its decision to revive the plans and float in New York is the latest setback for the London Stock Exchange, following Cambridge-headquartered Arm’s similar move and a string of companies ditching the UK for US listings.
Plumbing supplier Ferguson and building materials company CRH have both moved to New York, while bookmaker Flutter is preparing a secondary listing in the US. British pollster YouGov has said it would considering moving its shares to the US or adding a secondary listing.
The number of companies listed on the London Stock Exchange has fallen by 60pc since the late 1990s and daily trade on the market has also fallen sharply.
The decline has sparked alarm in Downing Street, with the Treasury seeking ways to revive activity and encourage listings. Jeremy Hunt set out measures to cut red tape when raising money on the market in his Mansion House speech earlier this year.
London has faced particular difficulty in attracting tech companies to list in recent years. These businesses are widely seen as securing better valuations with less scrutiny over governance and pay on Wall Street.
Imagination, based in Hertfordshire, is a rival to Arm in the design of central processors and graphics chips, and is likely to have been boosted by its bigger counterpart’s successful float last week.
The company’s graphics processor technology is used in smartphones and virtual reality with customers including iPhone-maker Apple.
Imagination was hit by a crisis in 2016 when a row with Apple threatened the majority of its sales. The company was bought the following year by Canyon Bridge, a US-based fund backed by Chinese state-linked investors. Imagination subsequently renegotiated its deal with Apple, its biggest customer.
The takeover has proved controversial. Its former chief executive, Ron Black, resigned in 2020 amid an effort by its Chinese investors to install four directors to its board. The boardroom coup was aborted after political backlash.
Since then it has installed former Nokia executive Simon Beresford-Wylie as chief executive and appointed new independent directors, as well as a US chief financial officer. This summer it also hired a US-based chief revenue officer.
Under new leadership, it has sought to compete more directly with Arm by working on a rival kind of microprocessor technology, known in the industry as RISC-V.
Accounts published last week revealed Imagination’s revenues increased to £120m in the year to December 2022, up 8pc on the previous 12 months. It reported a profit before tax of £17m.
Canyon Bridge has turned down private approaches in the past. It is unclear how much Imagination is expected to be valued at, although share awards linked to a public listing only vest if the group is valued at more than $800m (£645m).
Imagination’s float would come at a moment of heightened tensions between the US and China amid a trade war fuelled by concerns over Beijing’s access to advanced technology.
Filing confidentially gives companies the flexibility to quickly go public if needed.
President Joe Biden has issued a series of orders that have made it harder to sell advanced microchips to China.
In its listing documents, Arm, a British company, stated its exposure to China could leave it at risk of future crackdowns by the White House.
Concerns about the company’s China business threatened to overshadow the flotation, but shares surged by 25pc on its opening day in a boost for companies looking to follow it.
Imagination Technologies did not comment.
