Source: Saudi Aramco

Top U.K. Lawmakers Question Weakening Rules for IPO of Aramco

  • Chairs of two government committees wrote to FCA about listing
  • Countries vying for listing that could be world’s richest IPO

Two senior British lawmakers are questioning plans by London’s financial regulator to change listing rules that would make it easier for Saudi Aramco to go public in London, in what may become the world’s largest initial public offering.

Nicky Morgan and Rachel Reeves, the chairs of Parliament’s Treasury and Business, Energy and Industrial Strategy Committees, wrote Tuesday to the U.K. Financial Conduct Authority’s chief executive officer raising concerns on how much the move may be driven by attracting Saudi Aramco. The FCA is consulting on creating a listings category to better cater for companies owned by a sovereign country.

Saudi Arabia aims to sell about 5 percent of Saudi Aramco in an IPO next year. The kingdom plans to list on the Saudi stock exchange in Riyadh and sell shares on at least one bourse outside the country. That choice pits the top global financial centers, including London and New York, against each other for a sale that could value the largest oil exporter at more than $1 trillion, making it the world’s largest company by market value.

Under current rules sovereign-controlled companies must list at least 25 percent of their shares to be eligible for the premium segment on the London Stock Exchange, which provides access to a wider pool of investors than a standard listing. The FCA consultation is looking at changing this, raising questions over how much it is centered on Saudi Aramco.

“To what extent was the FCA aware of any interest shown by Saudi Aramco in obtaining a U.K. listing and, if known, how far that interest influenced the consultation?" Morgan and Reeves asked Andrew Bailey in the letter released Friday. “We are interested to explore the rationale for this consultation, particularly given the concerns expressed by stakeholders that these proposals would weaken protection for private investors."

A spokeswoman for the FCA said the agency would respond "in due course."

U.K. Prime Minister Theresa May traveled to Saudi Arabia last month and promoted London as a destination for the IPO. London Stock Exchange Group Plc Chief Executive Officer Xavier Rolet accompanied the British premier.

The consultation was opened in July, and will close next month. The main contenders for the listing are: London, New York, Hong Kong, Tokyo, Singapore and Toronto. Morgan and Reeves also raised questions over what discussions the regulator has had with ministers on the possible rule changes.

— With assistance by Javier Blas

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