Wall Street and LSE Battle to Host US$100bn Floatation of Saudi Arabia’s Aramco
November 7, 2017
President Donald Trump has made a pitch to Saudi Arabia to float the world's biggest oil company in the US. “Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!”, twitted the US president.
The proposed share flotation will see 5% of the state-owned company sold in an Initial Public Offering next year. It is expected to list domestically and on at least one foreign exchange with New York and London vying for the deal.
The Aramco IPO is expected to be the largest in history, raising around US$100bn in revenue for the Saudi kingdom. If listed in London, it could be worth up to £56bn for the London Stock Exchange.
Mr Trump was tweeting at the beginning of an eleven day trip to Asia, which will take the president and First Lady Melania Trump to Japan, South Korea, China, Vietnam and the Philippines.
British Prime Minister Theresa May met the boss of Saudi Aramco earlier this year. During a trip to Saudi Arabia in April, Mrs. May held talks with chairman Khalid Al-Falih, who is also Saudi Arabia's energy minister.
She was joined at the meeting by Xavier Rolet, chief executive of the London Stock Exchange.
The Financial Conduct Authority (FCA), the UK City watchdog, is currently consulting on whether to create a new category for sovereign-controlled companies who wish to list on the London Stock Exchange.
The proposal has prompted questions from both the Commons Treasury Select Committee and the Business, Energy and Industrial Strategy Committee over whether the FCA was politically influenced to alter the rules to help lure Saudi Aramco to London.
In a letter to both committees, FCA chief executive Andrew Bailey admitted that discussions with the world's biggest oil firm were held early this year. But he said: “We do not think protections for investors will be weakened.”
Under existing UK listing rules, every time a company does a deal with an investor who controls a stake of 10% or more in the business, the company must get shareholder approval. Relaxing this rule would mean Saudi Aramco could do deals with the Saudi government without shareholder approval.