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FCA changes listing rules for Aramco float - Javier Blas dubs it “Zombie IPO”

written by Remo Bebié

The UK's Financial Conduct Authority (FCA) pushed ahead a change in the listing rules for the London Stock Exchange's (LSE) premium segment. The move is seen as an attempt to get Saudi Aramco to implement its planned initial public offering (IPO) in London, floating 5 percent of the state-owned company at the LSE. The FCA argues that the move would bring considerable benefit to investors.

Critics include business and investor organisations such as the Institute of Directors and the Investment Association, who say the move waters down corporate governance rules designed to protect investors and British savers. A premium listing is a necessary, but not a sufficient condition for Saudi Aramco to be included in major equity indices such as the FTSE 100. The FCA told Reuters that while a premium listing in London would typically require a float of at least 25 percent of a company’s shares, the new category could allow a smaller float (Financial Times, Reuters, Guardian, BBC).

Meanwhile doubts persist on the IPO ever happening (WSJ). Bloomberg's Javier Blas recently referred to the planned float as a "$2 trillion Zombie IPO", citing hubris on valuation, an overambitious timetable and investor indifference as main reasons for the continuing delays.Reuters report that Aramco is now planning to take on a strategic stake in petrochemical firm Saudi Basic Industries Corporation (SABIC), which would allow the IPO to be delayed until 2020 or beyond.

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