The roadshow for semiconductor chipmaker Arm Ltd.'s flotation starts this week, and the mood music for the biggest initial public offering of the year, and one of the largest ever, has suddenly become more somber. Warning flags are fluttering as the SoftBank Group Corp.-owned unit has nearly halved the amount it plans to raise, and at a lower valuation range. After losing out to New York’s Nasdaq Inc. for the right to host the listing, London Stock Exchange Group Plc may reflect on a lucky escape.

IPOs rely on buyers clambering over themselves to get hold of precious allocations. They are designed to be a feeding frenzy; technology sector listings especially. SoftBank has a patchy record when it comes to valuing and selling assets, and this crucial placement has been fraught with missteps. A failure to deliver a successful stock-market introduction and achieve a sustained healthy premium in the after-market could mar the global tech sector for months to come.

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London Dodges a Bullet With Arm’s US Listing