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Monday, 5 June 2017

London Stock Exchange shouldn't bend rules for $2tn Saudi flotation | Nils Pratley | Business | The Guardian

London Stock Exchange shouldn't bend rules for $2tn Saudi flotation | Nils Pratley | Business | The Guardian:

"Roll up, roll up, who wants some lovely Saudi dosh that would arrive with a stock market listing in London of Saudi Aramco, the enormous state-owned national oil company? Almost every investment banker and corporate lawyer in town, obviously. Aramco, if it is really worth about $2tn (£1.5tn), would be the world’s biggest flotation. The advisory fees would keep rolling in for decades because, once a firm has settled on a foreign stock exchange, it tends to stick around. That is why there is an intense lobbying effort to persuade City regulators that, to sweeten the appeal of London over New York, Aramco should be given fast-track entry to the FTSE 100 index, even though the Saudi regime seems to have no intention of meeting one of the basic qualifying criteria. Only a 5% slice of Aramco would be sold to outsiders, it is reported, whereas the rules state that at least 25% of the shares must be in public hands to be a so-called “premium” listing. The Saudis seem to fancy the “premium” label and prestige of FTSE 100 status, but don’t like the obligations that would go with them. Thank goodness, then, that the Investment Association, which represents the fund management establishment, is kicking up a fuss. It makes a point that is really just common sense. If you have a sound rule, born from hard experience of how minority investors can be exploited by a single controlling shareholder, stick to it. If you bend the rules to accommodate a deep-pocketed new arrival, you will look desperate and grasping, which will damage London’s supposed standing as a high-class financial centre."



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