Watchdog looks to reform market rules in bid to lure Aramco
The City watchdog is pressing ahead with controversial plans to overhaul stock market rules that would allow oil giant Saudi Aramco to choose London for its record-breaking flotation.
The Financial Conduct Authority (FCA) is consulting on proposals to create a new category of listing that could pave the way for Aramco to float in the City in what is set to be the biggest initial public offering (IPO) in history.
Saudi’s state-owned Aramco is preparing to list only around 5 per cent of its shares and the FCA plans would allow the group to side-step rules that companies must sell at least 25 per cent of their shares to gain a “premium” status.
The FCA, which is headed by chief executive Andrew Bailey, said it wants to set up a new premium listing category for sovereign-controlled companies, which would allow them to avoid the stigma of a “standard” listing.
But there has been outcry over the move, with investors and governance groups warning against bending stock market rules.
There are worries that such a small shares placing on a premium listing could leave investors holding shares in a relatively illiquid stock.
Saudi officials are said to have valued Aramco at more than $2 trillion (£1.55tn) and given its size, even a 5 per cent listing would mean the stock would automatically become a significant part of many passive equity funds.