UK weighs new IPO rules for sovereigns

LONDON • The UK market regulator may ease listing requirements for companies controlled by a sovereign country as London woos Saudi Aramco, which is planning what could be the world’s largest initial public offering (IPO).

The Financial Conduct Authority (FCA) yesterday outlined a new category in its premium listing segment for state-owned businesses, proposing two key exceptions. While the proposals could inch London ahead in the global competition to lure the oil giant’s listing, a shareholders’ group criticised weakening protections for investors. The company — formally known as Saudi Arabian Oil Co — aims to raise as much as US$100 billion (RM430 billion).

Under the proposed changes, sovereign shareholders that own significant stakes will no longer be considered related parties — meaning deals

they do involving the premium listed company they control, such as buying from or selling state assets to that company, will not be subjected to a vote by independent investors. They will also be exempt from rules that apply to other controlling shareholders, such as those which restrict freedom to appoint directors to the board without the approval of independent shareholders.

The UK Investment Association, an influential industry body that represents funds managing more than £5.7 trillion (RM31.35 trillion), has said it opposes loosening listing rules to

bring Aramco to London. “The FCA is consulting on removing key investor protections from the premium listed segment to accommodate sovereign-controlled companies,” said Chris Cummings, CEO of the Investment Association. “Investors believe a premium listed segment without these investor protections is not a premium segment and will not provide the protections that investors expect.”

The London Stock Exchange’s premium listing segment has stricter rules and reporting requirements than a standard listing. It also has access to a wider pool of investors and large companies typically list on the premium segment. An Aramco listing would be a boost to post-Brexit London, helping politicians make the case that the UK is open for business and remains a financial hub even as it leaves the European Union — and its single market. — Bloomberg