Our views

An Aramco IPO must play by the rules

Ashley Hamilton Claxton, Corporate Governance Manager

8 June 2017

Any attempt to bend the listing rules in order to facilitate the Initial Public Offering (IPO) of Saudi Aramco is highly inappropriate and flagrantly ignores the principles which the UK’s listing rules were designed to defend. While the listing would be a prize asset on the exchange due to the sheer size of the firm, the attempt to list just 5 per cent of the total share capital flies in the face of what is acceptable. The rules which regulate the UK’s equity market are designed to ensure the integrity of the London market as a leading global exchange and to protect the interests of minority investors, particularly when there is a large controlling interest in a UK listed firm. These should not be tampered with, no matter how attractive the prize.

Given the size of Saudi Aramco, even a 5 per cent listing would mean the stock would become a key part of many of the passive equity funds which investors are increasingly using to invest in stock markets. The pension funds of millions of British savers could end up holding Aramco shares without many of the governance protections usually available to UK investors. 
We will be lobbying strongly against any concessions being granted should there be a formal attempt to IPO Aramco in the UK.  As long-term investors in the UK equity market we fear this precedent could lead to a slippery slope. If this deal is forced through without adherence to the UK’s listing rules, there is a real danger further listings could emerge where large international firms are able to access UK capital markets without playing by the rules.


The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.