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Aramco is highly unlikely to list on the New York Stock Exchange, Mark Mobius, executive chairman of Templeton Emerging Markets Group, told CNBC. The reason: risk of litigation.
Interestingly, however, Mobius added that a listing in London is also doubtful because transparency is essential for those who want to list on the LSE and Aramco has been reluctant to share details about its operations despite a lot of declarations that transparency is very important for the company in view of its listing.
"I think New York is pretty much out because of the risk that they have litigation. London may be out too because they don't want to disclose a lot of the inner workings of Aramco, so it's going to be very interesting to see what happens with that deal," the executive of the UK’s largest emerging markets fund said.
Riyadh has insisted that all the international exchanges it looked into as possible venues for Aramco’s secondary listing are still under consideration, including London and New York. A few days ago, President Trump said an Aramco listing on NYSE would be “important to the United States.”
Important or not, Aramco is indeed cautious about this particular venue. Earlier this year, the FT reported that a legal adviser to the Saudi company had warned that a listing in New York carried a very high risk of litigation. The report cited White & Case as saying that the reason for this risk was the “litigious culture” in the country, but it’s not just about culture. It’s about specific legislation that allows U.S. citizens to sue Saudi nationals for the 9/11 terrorist attack.
There have been reports that an international listing may not take place at all, and a private placement was the smarter way to go. However, official government sources in Riyadh are sticking to the original narrative of a dual listing in Saudi Arabia and abroad, to take place in the second half of next year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.