LSE boost as Saudis snub US in £1.6tn deal

The world’s biggest exchanges are battling for a slice of the government- owned business, which is worth up to £1.6trillion. LONDON and Hong Kong are emerging as the top competitors for the mega-float of Saudi oil giant Aramco as its owners shun the US.

Many see the New York Stock Exchange as a major competitor – but last night a senior financial source in Saudi Arabia said US politics were a major impediment. He cited anger at the aftermath of the 9/11 attacks – when the Gulf nation was accused of supporting terrorism – and the end of sanctions on regional rival Iran.

‘I don’t think it will go to New York because of 9/11, which they punished Saudi Arabia for even though we had nothing to do with it,’ the source said.

‘Politically, it’s difficult. President Barack Obama was very naive when it came to Iran – under Donald Trump the relationship is much better.’

Concerns over America mean that the London Stock Exchange is likely to be the frontrunner for the initial public offering, which will be the biggest in history.

LSE boss Xavier Rolet joined Prime Minister Theresa May on a visit to Saudi earlier this month, attending talks at the country’s own exchange and a meeting between May and oil minister Khalid al-Falih, Aramco’s chair- man. Britain already has strong historical and trading ties with the kingdom, which took in £4.6bn of UK exports last year.

London’s time zone is also favourable, with only two hours’ difference.

And although the biggest concentration of investors’ cash is in the US, the City is thought to be a more flexible and welcoming place for foreign businesses.

However, it is facing fresh competition from Asia – and Hong Kong in particular. The city is one of a handful able to challenge London, and its importance will only grow alongside China’s rising middle classes.

A consortium of Chinese investors is expected to bid for shares, including nationalised oil companies, banks and the country’s sovereign wealth fund. Shanghai has also put itself forward and is hosting Aramco executives for a board meeting next month.

Up to 5pc of Aramco, worth an estimated £62.5bn, is to be listed next year. A slice of that action will go to the Saudis’ own exchange but at least one foreign venue will be involved.

Aramco has long been the jewel in the kingdom’s crown, producing enough oil to satisfy nearly an eighth of global demand. But falling oil prices have forced the government to raise cash on the international markets.

An LSE spokesman declined to comment last night.