Saudi Aramco refutes claims IPO to be shelved as the Investment Association objects to the bending of London listing rules
Saudi Aramco has refuted reports that its planned float is set to be shelved.
The group was addressing claims in the Financial Times over the weekend that the oil giant was considering shelving plans for an international listing in favour of a private share sale to the world’s biggest sovereign wealth funds and institutional investors.
Today the company issued a statement via Twitter, and said the FT’s report was “entirely speculative”.
“All listing venues under review for optimal decision, IPO process is on track for 2018,” the firm said.
FT report on Saudi Aramco IPO is entirely speculative. All listing venues under review for optimal decision,IPO process is on track for 2018— aramco | أرامكو (@Saudi_Aramco) October 14, 2017
This is not the first time Aramco has been forced to reiterate its intention to float next year. At an energy forum held in Moscow earlier this month, the group’s chief executive Amin Nasser addressed reports that the IPO was facing delays, and said it was progressing as planned.
Read more: Saudi Aramco is still on for listing in 2018 says chief executive, but no update on location
Aramco first confirmed it was considering what is likely to be the biggest ever stock market flotation, valued at around £1.5 trillion, in January last year. The company has not made a decision on the location of the planned float, but the UK’s Financial Conduct Authority (FCA) has proposed new rules to make it easier for sovereign state-owned companies to list their shares in London.
However, the FCA has come under increasing pressure for its proposed rule bending. The Investment Association (IA) – the trade body which represents the UK’s largest investment managers – revealed this weekend an extract from a strongly worded letter to the financial watchdog’s chief executive Andrew Bailey, rejecting the plans.
“The Investment Association is opposed to the targeted proposal to create a new premium listing category for sovereign controlled commercial companies,” wrote IA chief executive Chris Cummings.
Whilst we support the FCA’s efforts to ensure the UK remains a competitive and attractive place for companies to list, new initiatives should not be at the expense of investor protections or the high standard of listing regime which are integral to the success of the UK market.
Saudi Aramco wants to make just five per cent of its shares available to public investors – far below the 25 per cent currently required for a premium London listing. Cummings added that shareholders “must have confidence that a company is run for all shareholders, not just the major or controlling shareholder”.
The IA is not the only body to have spoken out against Aramco’s London float. The Institute of Directors said earlier this year that the new rules would “do little to address the risks and challenges these companies pose, which include the potential for politically motivated ownership interference over the company by the state apparatus and national governments undermining the rights of minority shareholders”.
Read more: City divided on Saudi Aramco: City of London Corporation backs FCA’s new listing rules to help stock exchange lure oil giant
Yet other City players are backing changes which would attract the mega-float. The City of London Corporation’s policy chairman, Catherine McGuinness, told City A.M. last month: “Crucially no one would be forced to invest, while sophisticated market participants will be able to make their own judgments.”
The London Stock Exchange’s chief executive Xavier Rolet has also added his backing to a review of the listing rules, as has Standard Life Aberdeen’s chairman Sir Gerry Grimstone.
While London remains divided, New York and Hong Kong have been named as other potential sites for the listing.
Read more: Standard Life Aberdeen chief says Saudi Aramco should come to London