The sale of British chip designer Arm Holdings represents a significant strategic misstep that may have discouraged other technology firms from choosing London as their listing destination, according to prominent UK fund manager Nick Train.
Train, who co-founded the £16bn investment firm Lindsell Train, believes Arm would have emerged as a “top five company” on the London Stock Exchange had it maintained its UK listing rather than being acquired by Japanese investment group SoftBank. The 2016 sale, valued at £24bn, appears particularly shortsighted given Arm’s current Nasdaq valuation of £110bn.
The veteran fund manager, who oversees the Lindsell Train UK Equity fund and Finsbury Growth and Income Trust, suggests recent developments might indicate a shift in attitude. He points to online property group Rightmove’s rejection of takeover approaches as evidence that “lessons have been learnt from the premature sale of Arm.” Despite REA’s three separate offers valuing Rightmove at up to £6.1bn, the board stood firm in its rejection.
Train’s investment portfolio has witnessed mixed fortunes, with some holdings such as Hargreaves Lansdown accepting takeover bids. The investment platform was acquired by a consortium of private equity firms for £5.4bn, while Manchester United saw Sir Jim Ratcliffe secure a 25% stake, enabling Train to divest a quarter of his holding “at the highest valuation ever recorded for a football club.”
Looking ahead, Train has increased his exposure to digitally-focused companies, with over 50% of his portfolio now comprising tech-related businesses. He maintains particular optimism about Newcastle-based software company Sage, suggesting its success could encourage more tech firms to consider London listings.
Despite experiencing a period of underperformance, with his UK Equity fund delivering 4.6% last year compared to the FTSE All-Share index’s 7.9%, Train’s long-term track record remains robust. The fund has generated average annual returns of 9.3% since launch, outperforming the benchmark’s 5.9%.
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