London and US vie for Saudi IPO fees

Saudi Arabia aims to sell about 5% of state oil company Saudi Aramco in an IPO next year, and stock exchanges from the UK to Japan are vying for what may be the world’s richest IPO.

The Saudi crown prince, Mohammed bin Salman, will soon decide where to sell the company’s shares after government officials heard a presentation on the listing process last week. 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 centres, London and New York, against each other for a sale that could value the largest oil exporter at as much as $2 trillion.

The Saudis and their advisers want to pick a foreign exchange or exchanges with similar listing and regulatory requirements to the Riyadh bourse, to avoid large deviations in pricing between the markets.

London improved its chances when regulators overseeing the London Stock Exchange proposed rule changes last month that would make it easier for governments to list their state-backed entities.

The changes would allow Aramco’s shares to trade on the London Stock Exchange’s premium segment, with access to a wider pool of investors than a standard listing.

The proposals would also eliminate a requirement that sovereign-controlled companies list at least 25% of their shares to be eligible for the premium segment. That’s a big concession to the Saudis, who have said they plan to sell about 5% of the company.

Bloomberg