The London Stock Exchange must not bend its rules to accommodate a partial listing of Saudi Aramco, warns a fund manager.
Royal London Asset Management said the idea of allowing Aramco to list only 5% of its share capital “flies in the face of what is acceptable”.
“The rules which regulate the UK’s equity market are designed to ensure the integrity of the London market as a leading global exchange and to protect the interests of minority investors, particularly when there is a large controlling interest in a UK listed firm. These should not be tampered with, no matter how attractive the prize,” said Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management.
Aramco, officially the Saudi Arabian Oil Company, has sole ownership of Saudi Arabia’s vast oil wealth. The Saudi government plans an initial public offering of the state-owned firm that may value it at $2 trillion.
However, to qualify as a premium listing on the London Stock Exchange, a company must list at least 25% of its equity, and the Saudi government has indicated it only wants to sell 5%.
“We will be lobbying strongly against any concessions being granted should there be a formal attempt to IPO Aramco in the UK,” said Claxton, in a statement. “As long term investors in the UK equity market we fear this precedent could lead to a slippery slope. If this deal is forced through without adherence to the UK’s listing rules, there is a real danger further listings could emerge where large international firms are able to access UK capital markets without playing by the rules.”
©2017 funds global mena