The world’s largest sovereign wealth fund has warned the Financial Conduct Authority (FCA) about its proposed changes to its share listing rules, which would accommodate state-backed firms like the Saudi Aramco mega-float.
Norway’s $1 trillion (£759bn) fund, which has invested £44bn in equities listed on the London Stock Exchange, joined a chorus of bodies urging the FCA to rethink the move.
London is vying to attract Aramco’s planned £1.5bn initial public offering (IPO), but the City has been divided on whether the FCA’s proposed new premium listing rules go too far. Under the plans, state-backed firms would be exempt from certain rules.
Norges Bank Investment Management (NBIM), the division of the Norwegian Central Bank which manages assets on behalf of the fund, wrote a letter dated 13 October to the FCA, in which it argued “relaxing” rules for sovereign-controlled companies would not be in the best interests of companies or other investors.
Ultimately, investors expect today’s high standards of shareholder protection to apply to the premium listing category, whether controlled by a sovereign state or private investors.
We fear that relaxing these rules would reduce the voice of minority investors and undermine the independence of the board.
NBIM said the changes would be a “step back” in terms of investor protection, especially for minority shareholders, and would threaten the London Stock Exchange’s standing as a best in class corporate governance framework.
“We believe the FCA should consider a more balanced approach that takes into consideration the interests of all stakeholders in the listing environment,” NBIM said.
Last week, the chief of the FCA said he met with Saudi Aramco earlier this year – ahead of publishing the FCA’s new listing rules.
Andrew Bailey hit back at critics, saying they were “picking the wrong argument”.
The FCA did not immediately respond to a request for comment.