The signing of a $350 billion arms deal between the Kingdom of Saudi Arabia and the US might not be enough to convince the Saudis to bring the Aramco IPO – expected to be the biggest public offering in markets history – to New York City. While the Saudi royal family, who hosted the president in May during his first-ever official visit to a foreign country, would like to see Aramco - the kingom's state-owned oil company - list on the New York Stock Exchange, the executives who are nominally in charge of the company apparently told the Wall Street Journal that they’d prefer to list on the London Stock Exchange, where there’s less risk of being hit with a shareholder lawsuit.
Here’s WSJ:
Executives at Saudi Arabian Oil Co., known as Saudi Aramco, are pushing Saudi Arabia’s king and his son, Deputy Crown Prince Mohammed bin Salman, on the merits of listing the state-owned oil company on the London Stock Exchange . Executives believe that listing in the U.S. would expose the company to greater legal risks, including from potential class-action shareholder lawsuits, according to these people.
But the Saudi Arabian royal court favors the New York Stock Exchange, according to the people familiar with the matter, in part because of the kingdom’s longstanding political ties to the U.S., and because the U.S. market represents the deepest pool of capital in the world.
A listing in New York, along with one on Saudi Arabia’s Tadawul exchange, has long been the favored listing option for Prince Mohammed, who is driving the IPO as part of a broader push to overhaul and diversify the country’s economy.
For months, the New York and London exchanges, along with other major global exchanges, have been pitching the merits of their trading venues, in some cases touting their existing crop of energy stocks and the breadth of their country’s energy sector to win the listing of what is likely to be the largest IPO in history.
The IPO could value Saudi Aramco as high as $2 trillion. In addition to fees generated, such a listing for an exchange promises to attract international investors looking for a piece of the giant oil producer, and that interest would generate greater trading volumes, the lifeblood of any stock market.
While WSJ neglected to elaborate on the executives’ reasoning – after all, plenty of foreign companies seem to have no issue listing their shares in the US, the world’s most vibrant IPO market – it’s likely that the Kingdom’s longstanding status as a financier of terror is one reason for their hesitation.
A few months back, Politico profiled a New York lawyer named Jim Kreindler who is representing more than 850 clients in a civil suit against the Saudi government seeking compensation for victims of the attacks.
Kreindler, who filed the lawsuit against the Saudis in a Manhattan court back in March, is the son of Lee Kriendler, who won a $3 billion judgment against Libya for the bomb that in 1988 destroyed Pan Am Flight 103 over Lockerbie, Scotland.
After the Supreme court ruled last year that nearly $2 billion in frozen Iranian assets must be turned over to the families of those killed in the 1983 bombing of the U.S. Marine Corps barracks in Beirut and other attacks for which Iran was found liable, it’s not out of question that a similar judgment could be made against Saudi Arabia. Especially since the release of the fabled “28 pages” that had been redacted from the 9/11 Commission’s official report on the Sept. 11 attacks appeared to support Kriendler’s argument that without financial and logistical support from members of the government of Saudi Arabia, the 9/11 attacks would never have taken place.
A decision on the venue is expected next month, WSJ reported, again citing one of its anonymous sources, though the timing could change. The paper’s sources tell it that a decision on the venue had originally been expected before the Islamic month of Ramadan, which started in late May.
Sources close to the royal family reportedly assured WSJ’s reporters that the listing would happen in New York – and it very well may. But what does it say that the people who are accountable for running Aramco view listing in the US as risky? The longstanding commercial ties between the US and Saudi Arabia – not to mention the praise of the Kingdom and its values offered by Trump during his visit – might be enough to satisfy the royals. But as WSJ reports, the planned sale of a 5% stake in Aramco - a stake worth between $1.5 and $2 trillion - could yield at least $75 billion in profits for the kingdom.
With that much at stake, it’s important to be realistic. And the fact remains that there are undeniable links between the Saudi government and the funding of terror.