London Proposes New Listing Structure To Attract Aramco Listing

The London Stock Exchange is trying to attain the Saudi Aramco listing by proposing a new structure that would make it more attractive for Riyadh to select the bourse, according to an exclusive report by Reuters.

Anonymous sources close to the matter said the LSE and the United Kingdom Listing Authority might set up a new category of companies on the exchange, which would attract listings from large foreign companies that do not want to sell a sizeable share of their corporation in an initial public offering.

Currently, the LSE offers two categories of listings. The premium category requires companies to list at least 25 percent of their shares in free float. The restrictions in the second “standard” category are less onerous, though the stocks in the section tend to be less desirable by investors. Saudi Aramco plans to offer just five percent of its company in its 2018 IPO, so neither option is a good fit for Riyadh’s vision.

But if implemented, the plan for a new international category would bridge the gap between the two options. It would meet investors’ “prestige” expectations while allowing Aramco to maintain control of its corporate life.

"Our recent work considers some important questions about the primary markets, and some potential enhancements, and are part of the Financial Conduct Authority’s wider work on UK primary markets as set out in our 2016/17 Business Plan," a spokesman told Reuters in response to questions about the creation of a new segment.

Related: Kuwait Sees $80 Oil By 2020

The KSA’s IPO of its prized oil company has caused a flurry in the international financial community. The government is expected to list the company in the domestic exchange, called Tadawul, and one foreign stock market. So far, New York, Hong Kong, Toronto, London, and several other cities have announced their interest in hosting the listing, but a decision is yet to be made.

By Zainab Calcuttawala for Oilprice.com

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