Theresa May is trying to get Saudi Aramco's IPO to list in London instead of New York

Published April 6th, 2017 - 11:23 GMT
Theresa May, pictured left with Saudi Arabia's King Salman, during her two-day trip to Riyadh on April 4 2017. (AFP)
Theresa May, pictured left with Saudi Arabia's King Salman, during her two-day trip to Riyadh on April 4 2017. (AFP)

Theresa May is in negotiations with Saudi Arabia about bringing the world’s biggest stock market flotation to London.

The Prime Minister used a two-day trip to the desert kingdom to hold intensive talks with Saudi ministers and executives at the state-owned oil firm Aramco.

Read more: Saudi Aramco Chooses Islamic Bonds In The Run-Up To Its Much-Anticipated IPO

Aramco is set to be valued at £1.6 trillion when it sells five percent of its shares on the open market.

On Tuesday, Mrs May held talks in Riyadh with the Aramco Chairman Khalid Al-Falih, who is also Saudi Arabia’s energy minister.

She was accompanied by Sir Xavier Rolet, chief executive of the London Stock Exchange, the only British businessman to join Mrs May on the trip.

Downing Street said the Prime Minister had ‘set out the advantages of listing in London’, such as the ‘depth of expertise’ and supporting ‘ecosystem’ of financial services, accountancy and the law in the City.

Read more: Saudi, Japan Mull Aramco Listing On Tokyo Stock Exchange

Sir Xavier also attended a second meeting yesterday with executives from Saudi Arabia’s Public Investment Fund - the world’s largest sovereign wealth fund - which will be the beneficiary of the Aramco flotation, which is expected to happen in 2019.

The Prime Minister ended her visit to Saudi Arabia yesterday with a working lunch with King Salman.

During the meeting at the Royal Palace, King Salman awarded the PM the Order of King Abdulaziz - the Saudi Arabian Order of Merit which was established in 1971 by King Faisal.

The honour has in the past been awarded to other G7 heads of state, including President Obama, Prime Minister Abe, and Prime Minister Modi.

Ministers believe Britain could gain from the Aramco Initial Public Offering (IPO) twice over - by persuading the Saudis to hold it in London, and by encouraging them to invest the proceeds of the share sale in Britain.

Read more: Saudi Aramco To Resume Oil Shipments To Egypt After Six Month Suspension

New York, Hong Kong, Tokyo, Singapore and Toronto are all rivals for the flotation, but New York and London are seen as the strongest contenders.

New York’s bid may be problematic because US Securities and Exchange Commission rules would almost certainly require Aramco to divulge information about Saudi oil reserves that the kingdom regards as a matter of national security.

London’s main hurdle could be the weak pound, though the value of sterling could have shifted by 2019 once the Brexit deal is finalised.

Read more: UK Eyes $6.5B Investments From Qatar, GCC As Brexit Approaches

The Aramco sell-off is part of a larger Saudi strategic plan called Vision2030, aimed at diversifying the country’s economy and reduce its economic dependence on oil and gas foolwoing the slump in world oil prices.

The proceeds of the sale will be used by the Saudi government’s Public Investment Fund and Mrs May hopes a chunk of that money will be invested in post-Brexit Britain.

During her meeting yesterday with representatives of the fund, Mrs May discussed investment opportunities in British science and research projects, education and infrastructure.

By Jason Groves

 


© Associated Newspapers Ltd.

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