UK PMs Push Back As Regulators "Bend The Rules" To Accommodate Saudi Aramco IPO

Tyler Durden's picture

All IPO’d up and no place to go? UK portfolio managers with $6.9 trillion resist rule bending by regulator to achieve Aramco London listing

Another potential problem for the world’s biggest ever (potential) IPO…

A lobby group representing UK portfolio managers with $6.9 trillion AUM has warned the UK financial regulator that bending the rules to accommodate Aramco’s IPO will damage London’s status as a global financial centre.

In a letter to the head of the Financial Conduct Authority (FCA), the embattled Andrew Bailey, the Investment Association (IA) argued that it threatened the “high standards” of London’s listing regime.

In “Funds fire broadside over Saudi oil float”, the Sunday Times noted that “Britain’s largest investors have turned up the heat on the City watchdog over its controversial plans to allow Saudi Arabia’s oil giant to float in London.”

Besides the tricky issue of its oil and gas reserves (especially the Ghawar field), the IA argued in the letter that “For the premium segment of the UK main market, investors must have confidence that a company is run for all shareholders, not just the major or controlling shareholder.”  

Selling only 5% of the share capital, rather than the prescribed 25%, is one of the major stumbling blocks in terms of the listing regulations.

According to the London Stock Exchange, a premium listing meets “the UK’s highest standards of regulatory and corporate governance.”

However, regulations are made to be broken…not just by banks and funds…but (when it suits) by the regulator itself, it seems. The FCA’s Bailey has proposed a new category of premium listing which would be tailor-made for government-controlled companies, like Aramco.

According to Bailey, investor safeguards would not be “weakened.”

It turns out that Bailey proposed the new category of premium listing after meeting and having conversations with Aramco and its advisers. As the Sunday Times reports, Bailey “emphasised during those conversations that we (FCA) were reviewing the listing regime.”

Perfect timing.

Clicking on the “About Us” tab on the FCA’s website, the regulator champions its wish that “consumers can place their trust in transparent and open markets” under the heading “Enhancing Market Integrity”.

Having said that, there is an option to click “No” after the question “Was this page helpful?”

In Bailey’s defence, it is possible that he’s being lent on by the British government to find a way to accommodate the high-profile Aramco IPO.

After all, Theresa May travelled to Saudi Arabia in April with the CEO of the London Stock Exchange, Xavier Rolet.

Here is Mrs May making the introductions in Riyadh on 5 May 2017.

Given the stringent anti-trust laws in the US and Aramco’s pivotal role in the Opec cartel, a US listing is also looking problematic. So, it’s no wonder that chatter about delays to the IPO or a private sale to China, or a consortium of sovereign wealth funds, has gathered pace.

Aramco denied such reports on Twitter over the weekend “All listing venues under review for optimal decision, IPO process is on track for 2018.”

If three denials are forthcoming, maybe we’ll know what’s really happening.

In the meantime, it’s embarrassing to the Saudi regime and not good news for improving its short/medium term cash flow problem.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
buzzsaw99's picture

You can buy 0.01% (non voting shares) of a ruthless aging dictatorial oil company for a mere one billion gagillion fafillion shabadabalo shabadamillion shabaling shabalomillion, yen. [/Dr. Evil]

Arnold's picture

Inshallah infidel.

We also have a pet rock that millions travel to visit annually.

Kayman's picture

Yes, Mecca, the rock of historic and current Pagan gods. Twas ever so.

Zen Xenu's picture

So Aramco seems skittish about answering questions regarding water cut in Ghawar.

PrivetHedge's picture

They should team up with Nestle.

new game's picture

calling janet. what percent is the fed going to buy? is the pentagon all in? yup thought so. security of the biggest petro dolla racket worldwide needs the best security a racket can buy...

Kayman's picture

The bigger elephant in the room is, "Why do the Saudis need to sell 5% of Aramco?"

Sonny Brakes's picture

Why come to me? What have I done to deserve such generosity?

SoDamnMad's picture

There will be no rise in sea levels from the melting of the polar caps because Saudi Arabia is pumping that excess water in Ghawar as fast as they can.

Doing what they can to save the planet.

Zen Xenu's picture

Heh heh, amusing assessment, with more than a few grains of truth in the exaggeration.

new game's picture

plates shifting, lol...

AE911Truth's picture

The Directors of Saudi Aramco have been briefed on the pending disclosure of New Energy technologies which will significantly reduce demand for petroleum as an energy source. Said disclosure cannot proceed until bagholders have been found for what little oil remains in the Kingdom. 

UnacknowledgedX's picture

Meanwhile, Randell L. Mills is not waiting for disclosure.

BrLP has engaged TMI Climate Solutions, whose parent MiTek, is a Berkshire-Hathaway company, to develop solutions for thermal applications with SunCell Light (power) source.

SunCell theory and commercialization engineering are mature enough to be outsourced to Columbia Tech, Boston MA. Equipment is being fabricated, procured, and shipped.

Kayman's picture

"bagholders have been found for what little oil remains in the Kingdom."

But, but, but, the bagholders will have the right to sue for FRAUDULENT MISREPRESENTATION in British and Saudi courts.  No risk, at all. No, none at all. 

wisebastard's picture

does JRH NBR work for camals too

wisebastard's picture

i really want to point out the obvious here but im gonna shut my mouth and talks shit...

Tugg McFancy's picture

List it on AIM. There's no standards there.

Tugg McFancy's picture

And seriously stop using the word 'problematic' this is zero hedge, not fucking huffpo.

runnymede's picture

They wouldn't be selling if production wasn't declining. 

Would be like giving Wayne Rooney a max contract in 2017

runnymede's picture

Opacity = shenanigans 

Aramco has always been very secretive about reserves. 

And who really knows what 'part' they are actually selling.

Sure has the hallmarks of a three card monty. 

Maybe just trying for one big final score to buy some bug out time and a few more London/Paris luxo hideaways.

Without oil Saudi Arabia is Jordan with a black cube. 

Kefeer's picture

The largest known land reserve, Ghawar, is now being pumped with 90% water to extract the deep and last 10%, which is still a lot of oil.  That is why Yemen was invaded; they have one the largest shallow water reserves known and untapped and the Saudi's need it.

Ban KKiller's picture

AND still a shit hole, mecca.

Kayman's picture

"Without oil Saudi Arabia is Jordan with a black cube."

Now that is hilarious.  

Mohamed was no piker, locking up that never-ending tourist trade and all.

Calculus99's picture

It will go ahead in London for one simple reason - the British are greedy fucks, show them a boat load of money and they're ALL yours. 

PS. No surprise that London and the UK are a fucking hotbed of money laundering. Show 'em the big cash and they're ALL yours...

Last of the Middle Class's picture

5% stake. LMFAO, Hell you won't even get to see accurate reserve data for 5% ownership. And just what in the hell makes anyone think that if oil can be manipulated back to $100/bbl AGAIN, they won't nationalize it AGAIN. Stupid is as stupid does. The Saudi's are attempting to end up with voter tax money through the sale of a small percent of their oil giant. They can't sell the shit and drive golden lambos at $50, so they'll run plan B. Scam the shit out of governments who will eventually pass the losses on to the taxpayers for a few more trillion. This deal is bad all the way around

Kefeer's picture

What do the Saudi's have over the west?  Must be some real nasty stuff.  Perhaps their own "control files".

Greed is King's picture

Not surprised, the British regulatory authorities (all of them) are run by public school hooray Henry little Lord Fontleroy chinless wonders, who like Westminster Politicians and Whitehall bureaucrats (contrary to Camerons "we`re all in it together") are in it for themselves and themselves alone. The corridors of power are decorated with cash filled brownn paper envelopes.