Saudi Crown Prince Favors New York Over London For Aramco IPO

Even though Saudi Arabia’s advisors are favoring London over New York for the foreign venue to list Aramco shares, Saudi Crown Prince Mohammad bin Salman and the Saudi government are more inclined to favor New York for the world’s largest IPO next year, Reuters reported on Friday, citing sources familiar with the plans.

Crown Prince Mohammad bin Salman—who is overseeing Aramco’s listing plans—may pick New York over London due to “political consideration”, in view of the long-standing Saudi-U.S. relationship, according to Reuters’ sources, who noted, however, that the final choice would also take into account financial factors.

“That is broadly correct,” a senior industry source told Reuters, referring to the NYSE option for Aramco’s listing.

Responding to Reuters, Aramco said that “All options continue to be held under consideration. There is no timetable requirement for an immediate definitive decision.”

A possible listing on the NYSE could give Saudi Aramco access to more liquidity, but the stricter disclosure rules in New York could also force Saudi Arabia to share information that its rulers consider sensitive, including oil reserves and forecasts on oil prices and oil demand, which would be crucial in determining how much Aramco is really worth.

Hong Kong is also still in the running for the IPO venue, alongside New York and London, according to Reuters’ sources.  

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Meanwhile, in the UK, the Financial Conduct Authority (FCA) is proposing to amend listing rules that would accommodate Aramco, but the proposal faces criticism by money managers and leaders who see the change as compromising London’s reputation.  

Aramco wants to sell just 5 percent, but under FCA rules, a company qualifies for a premium listing only if it has a minimum 25 percent free float, meaning that Aramco’s 5-percent listing would fall significantly short of qualifying unless the listing rules were changed to accommodate it.

By Tsvetana Paraskova for Oilprice.com

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