The London Stock Exchange is considering bending the rules to allow Saudi Arabia’s Aramco to easily list on the market, attracting criticism from major industry players.
Global markets are fighting over who will win the listing of Saudi Arabia’s oil firm Aramco, which is thought to be the world’s biggest flotation with a value of $2 trillion. In order to boost London’s appeal, there have been suggestions that the exchange is willing to bend the rules in order to entice Aramco. Aramco are aiming to float a 5 percent stake on the market, a far smaller portion than the 25 percent normally requested by London listing rules.
However, critics have called the idea of bending the rules “inappropriate”, with Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management saying:
“It would be highly inappropriate for us to be bending listing rules and bending benchmark rules to accommodate this one large company.
“There’s lots of money to be made for investment bankers and advisers, but very little protection for pension savers and that’s something we really need to keep at the heart of this situation.”
Aramco is thought to be considering selling shares in London or New York, among other markets. The boss of the Investment Association Chris Cummings firmly supports the rule that companies must list 25 percent, “irrespective of the size of the company being listed”.
Cummings said: “Improving the efficiency of the IPO process is one of the ways in which this can be achieved. However, many see good governance and liquidity as critical elements to the whole process. We would therefore like to reiterate our members’ view that 25 per cent should be the minimum free float level for any premium listed company in the UK, irrespective of the size of the company being listed.
“This should be preserved at all costs to protect the integrity and standard of the UK premium listing,” the IA added.