FCA de­fends chang­ing list­ing rules to cater for Aramco IPO

The Daily Star (Lebanon) - - BUSINESS -

The U.K. mar­ket reg­u­la­tor de­fended a pos­si­ble move 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.

An­drew Bai­ley, the chief ex­ec­u­tive of­fi­cer of the Fi­nan­cial Con­duct Au­thor­ity, told law­mak­ers that he didn’t think the changes would weaken pro­tec­tions for in­vestors, a let­ter from Bai­ley re­leased Fri­day said. He added that the FCA met with Saudi Aramco ear­lier this year and dis­cussed the pos­si­ble IPO.

The FCA is re­view­ing the cre­ation of a new list­ings cat­e­gory to bet­ter cater to com­pa­nies owned by a sov­er­eign coun­try. Nicky Mor­gan and Rachel Reeves, the chairs of two Par­lia­men­tary com­mit­tees, wrote to Bai­ley in Septem­ber to ex­press con­cerns over how much the FCA con­sul­ta­tion was driven by Aramco.

“Our pro­pos­als are con­sis­tent with the Trea­sury’s rec­om­men­da­tions to the FCA, pub­lished … in early March,” Bai­ley said in the let­ter, dated Oct. 6. “The rec­om­men­da­tions in­clude the point that Lon­don re­tain­ing its po­si­tion as the lead­ing in­ter­na­tional fi­nan­cial cen­ter sup­ports the aim of sus­tain­able eco­nomic growth.”

The world’s top fi­nan­cial cen­ters are fight­ing to at­tract the roughly 5 per­cent list­ing that could value at more than $1 tril­lion. Saudi Ara­bia plans to list on its stock ex­change in Riyadh and sell shares on at least one other bourse out­side the coun­try. The main con­tenders for the list­ing are: Lon­don, New York, Hong Kong, Tokyo, Sin­ga­pore and Toronto.

The FCA de­clined to com­ment be­yond Bai­ley’s let­ter. Of­fi­cials from the reg­u­la­tor are sched­uled to ap­pear be­fore Mor­gan’s Trea­sury Com­mit­tee later this month.

“Ques­tions re­main about the level of po­lit­i­cal in­volve­ment in the con­sul­ta­tion,” Mor­gan said in a state­ment on Bai­ley’s let­ter Fri­day. “The U.K.’s world-class rep­u­ta­tion for up­hold­ing strong cor­po­rate gov­er­nance mustn’t be wa­tered down.”

The Aramco list­ing is the lat­est in a num­ber of ques­tions the FCA is fac­ing from the Trea­sury Com­mit­tee. Mor­gan has also writ­ten to Bai­ley about a re­port into busi­ness lend­ing prac­tices at Royal Bank of Scot­land Group Plc. The FCA re­fused to hand over a re­port to the com­mit­tee af­ter it was leaked to the me­dia in Au­gust, with Mor­gan propos­ing an ex­ter­nal lawyer re­view the doc­u­ment on the com­mit­tee’s be­half. – Bloomberg News

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