The Financial Conduct Authority (FCA), the UK’s markets watchdog, will press ahead with a controversial new premium listing next month aimed at attracting companies like state-controlled Saudi Aramco to float on the London Stock Exchange.
A premium listing in London would under normal circumstances would require a float of at least 25% of a company’s total shares, but today’s announcement signifies the new category could allow a smaller float, the FCA said.
Saudi Arabia is expected to float 5% of Aramco, the world’s most valuable company, in Riyadh and also one of the major world trade centres, probably London or New York. It is expected to be the largest IPO in history and would be a huge boon to the recipient city. It is the first time the FCA’s rules have been changed in such a significant way, although they have been tightened following criticism that Saudi Aramco was being treated with undue favouritism.
Benefit to investors
“The FCA thinks there is considerable benefit to investors if corporate issuers agree to meet these additional premium requirements,” the regulator said in its 83-page statement issued this morning.
Andrew Bailey, FCA chief executive, said: “These rules mean when a sovereign controlled company lists here, investors can benefit from the protections offered by a premium listing. This raises standards. This package recognises that the previous regime did not always work for these companies or their investors. These rules encourage more companies to adopt the UK’s high governance standards.”