Anticipation mounts for tech industry domination: City's economy hit as foreign aggressors eye five lucrative companies
London's tech market is grappling with a damaging outflow of promising startups due to a spate of foreign acquisitions that have some industry experts ringing alarm bells. The chips are down, with Alphawave potentially losing its UK base as early as today, given Qualcomm's deadline to make a bid expires at 5 pm.
Meanwhile, five London-listed tech firms, boasting a combined worth of over £5bn, are embroiled in takeover talks as ravenous suitors seek a piece of the tech pie. This frenzied activity is sending shiver down the spines of City bigwigs, who fear it's eroding Britain's dreams of becoming a formidable global tech powerhouse.
London's woes extend beyond Alphawave. The city is bleeding companies and struggling to draw in new blood via share listings. Insiders claim Britain is still reeling from the sting of Cambridge-based chip designer Arm's decision to list in New York in 2023. Arm's current value stands at £100bn, making it the fifth-largest company on the FTSE 100 – and the UK's largest tech stock – had it chosen London.
'It would have been a game-changer for the UK market,' laments a disheartened City source. 'The UK market would have benefitted from a prominent addition that would have spurred greater activity.'
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Government urged to act fast:
As the clock ticks on takeover deadlines for two more tech firms next week, ministers are under increasing pressure to intervene. Takeover deadlines for GlobalData and Craneware loom on June 11 and June 13, respectively, but extensions are possible.
Meanwhile, FTSE-targeted companies like Alpha Group and Northern Ireland software company FD Technologies are attracting interest from foreign buyers. Successful takeovers could send these companies packing from the London Stock Exchange, compromising its prestige and the City's standing.
Losing these firms would erode tax revenues and job opportunities, extend a streak of outflows, and further undermine Britain's ambition to foster a tech ecosystem that rivals global powerhouses.
Growth on the ropes:
Successful takeovers would further damage the UK's tech industry by crushing homegrown startups under acquisitive foreign giants. This follows a record £10bn worth of deals in the technology, media, and telecommunications sector in 2023, including the acquisition of cybersecurity giant Darktrace.
The Future's Unwritten:
Analysts argue that the UK needs to act now to revive its tech sector and nurture the companies of tomorrow. Charles Hall, head of research at Peel Hunt, succinctly sums it up, "If we want the UK to be a center of excellence for tech companies, we must have a vibrant equity market to support them and provide growth capital. The government needs to act fast to avoid losing these firms."
Had Arm opted for a London listing, the ramifications could have been profound. A single heavyweight addition would have likely triggered a "halo effect" that would have invigorated the UK market, inspiring more activity.
Hargreaves Lansdown's Susannah Streeter concurs, branding another round of acquisitions as "another blow to London's aspirations to retain and attract more tech firms to list."
Metals investor Cobalt Holdings recently scrapped plans for a London IPO, adding to the city's growing list of disheartened investors.
In the words of former Prime Minister Boris Johnson, "The UK is open for business," but the jury's still out on whether London's dream of standing shoulder-to-shoulder with global tech titans will ultimately be realized.
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- The government's inaction might lead to a loss of key tech firms like Alpha Group and FD Technologies, potentially listing on foreign exchanges instead, which could compromise the London Stock Exchange's prestige and hinder Britain's ambition to rival global tech powerhouses.
- The UK's tech industry is facing a threatening trend, as foreign giants continue to acquire promising domestic startups, such as Darktrace, resulting in the crushing of homegrown innovation and diminishing Britain's aspirations to foster a vibrant tech ecosystem.
