UK financial watchdog proposes new rules to bring Saudi Aramco IPO to London
The Financial Conduct Authority (FCA) is pressing ahead with plans to change the current laws to allow Saudi Aramco to choose London to host its Initial Public Offering (IPO), which has been tipped to smash all previous records.
The world’s leading stock exchanges are vying for the right to hold the IPO, which analysts have said could raise as much as $2 trillion, a the energy giant looks to sell off 5% of its assets to boost its coffers that have been hit by more than two years of stubbornly low oil prices.
Under the current rules, companies must sell at least 25% of their shares to gain a ‘premium’ status, far below that being sold by Aramco.
But the City watchdog has launched a consultation on proposals to create a new category within its premium listing regime to cater for companies controlled by a shareholder that is a sovereign country.
If passed, the new rules would allow London Stock Exchange to host the ‘IPO of the Millennium’.
The proposal will address companies controlled by a shareholder that is a sovereign country, as is the case with Saudi Aramco, which is wholly owned by the Saudi’s powers-that-be.
Andrew Bailey, FCA Chief Executive, said: “Regulatory protections for investors lie at the core of the listing regime. However, it is important that these protections remain well-targeted. Refining the listing regime in this way would make UK markets more accessible whilst ensuring that the protections afforded by our premium listing regime are focused and proportionate.
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“Sovereign owners are different from private sector individuals or companies – both in their motivations and in their nature. Investors have long recognised this and capital markets are well adapted to assess the treatment of other investors by sovereign countries.”
The plans are bound to cause controversy and leading figures in the finance world have already warned against such a move, as even at 5% the value of the shares would mean that mean the stock would automatically become a significant part of many passive equity funds. In June, Ashley Hamilton Claxton, Corporate Governance Manager, at Royal London, said that any Aramco IPO “must play by the rules”.
“Any attempt to bend the listing rules in order to facilitate the 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 percent of the total share capital flies in the face of what is acceptable.”
Hamilton added that Royal London would be lobbying strongly against any concessions being granted should there be a formal attempt to IPO Aramco in the UK.
The FCA has asked for responses to its consultation by 13 October, and has indicated that it will look to publish responses before the end of the year.
5 Mins With ... Travis Parigi, CEO of LiquidFrameworks
ServiceMax, a leader in asset-centric field service management, has bought LiquidFrameworks, the mobile field operations management solutions company, specialising in the energy industry, from Luminate Capital Partners, a private equity firm. The acquisition enables ServiceMax to expand its field service management solutions to meet the unique challenges of the energy sector. Travis Parigi, CEO of LiquidFrameworks, reflects on the mutual benefits from the deal and how oilfield service providers can transform their legacy field operations management processes to digital systems
Briefly outline how the LiquidFrameworks acquisition benefits both companies?
Both companies are focused on providing solutions to a common business problem, field service management for enterprise organisations, using a common technology platform, Salesforce. There are rich opportunities across both companies to leverage people, knowledge and many years of domain and technical expertise that will undoubtedly benefit the combined product suite.
LiquidFrameworks will continue to support its customers through this combination with ServiceMax, further extending its competitive differentiation across the field service management landscape. On the other hand, this acquisition will better position ServiceMax to meet the demand for digital service execution in this industry while expanding its product portfolio and go-to-market channels.
How can oilfield service providers transform their legacy field operations management processes to digital systems?
Moving from legacy, paper-based systems often siloed in various departments to a digital process can be done in phases across one or more product lines on a location-by-location basis. We find that companies achieve the best results by leveraging the FieldFX product suite as the platform to deliver the most domain-specific functionality to their user base as quickly as possible yielding high ROI through increased cash flow, revenue recapture, invoice accuracy and labor reduction.
Companies often start by modeling the complexities and mechanics of their global price books and customer-specific price books using the FieldFX CPQ engine. As the foundation for all transactions the Price Books are used throughout the logical next steps of rolling out digital processes for Quoting, Scheduling, Ticketing, Timecards and Invoicing. Asset Management plays an important role as a common thread found throughout all of the modules and processes.
Field Technicians are responsible for delivering service to the customer along with operating new digital systems - anything more specific, which systems or new technologies (eg AI/ML) should they be targeting?
In the oil and gas industry the field technician or field engineer is responsible for leading the crew that delivers the service such as an open hole wireline job or a casing job or a pressure pumping service performed on location for the customer at the well site in the case of the upstream oil and gas industry.
In the case of the downstream industry, the service might be a hydro-blasting job to clean a heat exchanger at a refinery.
In either case, the field engineer must safely and effectively complete the complex and often times dangerous service for the customer during which time they must also complete various business process to track the work being executed in order that the back office can accurately invoice for the service. The FieldFX Mobile product from LiquidFrameworks enables the field engineer to track the required information for both operational data and financial data in a manner that is fast, effective and easy.
Does the post-COVID landscape provide a new start for digital field service management? What should be companies' immediate priorities?
With the recent layoffs and the workforce getting younger, the oil and gas industry is at the cusp of transformation. The oil and gas industry has been slowly digitising for many years now, but with the pandemic, this push has accelerated a pivot and implemented new ways of working.
When it comes implementing digital field service management, companies need to have a vision of totality across the organisation but be nimble and agile about taking bite-size chunks to effect change – take the highest return on investment items and divide them up and down into the service line and geography level – for the highest probability of success.