U.K. Listing Rule Shift Would Help Woo Aramco -- WSJ
04 Agosto 2017 - 4:02AM
Dow Jones News
By Samuel Agini and Ben Dummett
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 4, 2017).
London Stock Exchange Group PLC's top executive endorsed the
right of the U.K. securities regulator to consider changing its
rules for sovereign-owned companies, a move that could make it
easier to woo the listing of oil giant Saudi Arabian Oil Co.
Xavier Rolet's support comes as the U.K.'s Financial Conduct
Authority proposes the adoption of a new listing category that
addresses the desire of state-controlled companies to access the
public markets without necessarily adopting key rules that are
meant to protect public minority investors.
The rules, if adopted, could give the LSE an edge over its main
rival the New York Stock Exchange in winning the coveted listing of
Saudi Arabian Oil, known as Saudi Aramco. But some large
institutional investors and business groups oppose the proposed
changes, worried they would undermine the integrity of Britain's
main stock market.
"It should be a surprise to no one if listing rules are from
time to time refreshed by the regulator to keep consideration and
to take into account the reality that we live in," Mr. Rolet told
reporters, without referring specifically to Saudi Aramco.
The state-owned energy producer is expected to list its shares
next year as part of an initial public offering that would value
the company at as much as $2 trillion. For the winning venue, the
listing promises an influx of fees and international investors
looking for a piece of the energy producer. Attracting a company of
Aramco's size would benefit the LSE, in particular, by underscoring
its status as a global financial hub when Brexit threatens that
reputation.
An Aramco spokesman wasn't immediately available to comment.
The debate over the possible listing changes for sovereign-owned
companies largely centers on two key proposals. One is a waiver to
the requirement that prevents an LSE-listed company from conducting
related party transactions with the controlling shareholder, its
directors or associates without first gaining approval from
independent shareholders.
The second proposal is to waive controlling shareholder rules
that are meant to protect the rights of minority shareholders in
companies where one group owns 30% or more of the voting
rights.
Saudi Aramco is looking to float no more than 5% of its shares
in the IPO.
Mr. Rolet said Thursday that regulators have already allowed
companies to sell less than 25% in an IPO as part of a London
exchange listing, including commodities trader and mining company
Glencore PLC in 2011.
"I think this proves the point that 25% is not a governance
test. It's simply a liquidity test," he said. "It's already built
into the rules today, that you can list with less than 25%,
provided of course you provide sufficient liquidity."
The FCA has justified considering the proposals in part because
of the different motivations of sovereign owners. Typically, public
companies are answerable to their shareholders. But state-owned
firms are also accountable to the sometimes conflicting needs of
their governments.
The Institute of Directors, a 30,000-member group in the U.K.
made up of directors across sectors, opposes the proposed rule
changes. "At best [the proposals] are changes that have been
formulated without regard to available evidence concerning
state-owned or state-controlled enterprises. At worst, they could
be interpreted as an opportunistic attempt at boosting short-term
primary issuance which ignores the longer-term implications for the
overall UK corporate governance regime, " the group said this
week.
The FCA plans to complete the rules by the end of the year after
consulting with market participants.
A version of this article also appeared on Financial News
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
August 04, 2017 02:47 ET (06:47 GMT)
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