- State oil giant Saudi Aramco could co-list in London and New York when it floats next year, according to an investment advisor.
- The company plans to float in mid 2018, but the listing venue is currently uncertain.
- London, New York and Hong Kong have been vying to woo the company.
LONDON — State oil giant Saudi Aramco could co-list in London and New York, according to one investment advisor.
Worth an estimated £1.5 trillion ($US2 trillion), the company is preparing to publicly list about 5% of its shares in mid 2018, but the listing venue is as yet unspecified.
This has prompted much speculation, and international players including London, New York and Hong Kong are vying to woo the company.
But according to Mihir Kapadia, CEO of Sun Global Investments, the listing may not be confined to one venue. “I think it could be at multiple exchanges,” he told Business Insider. “I think Saudis have all the choices at their disposal.”
Kapadia said he would “not be surprised” if Saudi Aramco chose to co-list in New York and London, in an effort to “demonstrate the size and strength of the company.”
This would not be the first time a stock is listed at multiple exchanges at the same time, and companies with dual listings include Royal Dutch Shell and Unilever.
Earlier this year, UK regulator the Financial Conduct Authority (FCA) proposed relaxing existing rules to allow sovereign-owned companies to list on the London Stock Exchange. This received strong criticism from Nicky Morgan, head of the Treasury Select Committee, who said the changes would harm the UK’s reputation for good governance.
In October, the UK Treasury announced it was preparing to guarantee a £1.5 billion ($US2 billion) loan to Saudi Aramco, a move criticised by the former Permanent Secretary to the Treasury Nick Macpherson as “mercantilism.”
But Kapadia said this loan was “business as usual,” and part of a wider drive to “woo the Saudi government” in the wake of Brexit. The heir to the Saudi throne, prince Mohammed bin Salman, is only in his 30s, he said, and is likely to be the Saudi head of state for several decades, “if he survives.”
Therefore, he said, it “makes sense” for the UK government to start engaging with his government. “As far as the politics of it is concerned, I think Britain is trying to play the long game.”
Kapadia also dismissed rumours the flotation could be shelved. “They need to see the stock listed,” he said, “partly because they need the money, they need the valuation and they need to unlock the value that they’re been sitting on.”
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