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Courtesy of the Times.
It was going to be a symbolic deal to prove that post-Brexit Britain was open to the world and not hopelessly dependent on the EU 27. The prize of a London listing for Saudi Aramco, the largest company on the planet by some measures, caught the imagination of ministers as well as investment bankers.
Theresa May was chief saleswoman, personally lobbying Khalid al-Falih, the Saudi oil minister and Aramco chairman, on a visit to Riyadh in April last year. She pressed on him the merits of London’s expertise and deep, liquid markets.
Bailey, chief executive of the Financial Conduct Authority, was the chief fixer, changing the listing rules in June so that Aramco would qualify for a premium listing despite its failure to meet basic safeguards on governance. A new international category of premium listing was created.
It was symbolic for Riyadh, too — a key plank of Crown Prince Mohammed bin Salman’s vision of modernising his medieval theocracy and raising cash to invest in other industries so as to wean the economy off its dependence on oil and gas.
The sums were colossal. Advisers to Aramco thought that the company might be valued at as much as $2 trillion, meaning that the 5 per cent stake it envisaged selling — worth $100 billion— could smash all records for a single IPO. And for a while it seemed an achievable bauble for London. New York might have been preferable to the Saudis, but Aramco was nervous because of the US Justice Against Sponsors of Terrorism Act, which might have exposed the company to litigation from victims of the 9/11 atrocities (though Riyadh has denied any involvement in the attacks). London was the obvious second choice.
Doubts started to creep in as the timetable for the IPO slipped. The scrutiny and accountability that western investors would demand was unpalatable to Riyadh. Disentangling company from state would be a wrenching task. And the recovery in the oil price reduced immediate financial pressures. The prize has proved to be a mirage.
