Saudi Aramco warned by lawyers on New York IPO litigation risks

The legal firm working on Saudi Aramco’s flotation has advised the kingdom that a New York listing poses the greatest litigation risk of any jurisdiction, the Financial Times reported on Sunday, citing sources.

White & Case and others offering informal counsel have briefed top oil executives and the kingdom’s highest authorities, emphasising a litigious culture in the United States, the FT said.

Legal risks arising from a New York listing include US legislation that could allow families of the victims of the 9/11 attacks of 2001 to sue Saudi Arabia, the FT said.

Aramco could also face class-action suits if it did not comply with US regulators’ rules on disclosing reserves and data for oil companies, while aggressive shareholder lobby groups in the United States are also seen as a threat.

A New York Stock Exchange listing and one on Saudi Arabia’s Tadawul exchange has been the favoured option for Saudi Aramco as Saudi officials and Saudi Aramco’s financial advisers believe the venue has the deepest pool of investors and is the most prestigious, the FT said, citing documents.

A premium category listing on the London Stock Exchange alongside a domestic offering was seen as the next best option, followed by a standard listing on the LSE for Saudi Aramco, the FT said, citing the documents. Legal counsel is now implying that London is now the front-runner, it said.

Saudi Aramco did not immediately respond to requests for comment outside regular business hours. White & Case declined to comment on the report.

Saudi Prince Mohammed bin Salman, who is the head of Saudi Arabia’s oil affairs, is expected to make a final decision within weeks, the FT said, citing an internal timetable.

The LSE, seen as one of the front-runners to win part of the IPO, has been pushing hard to land it. Sources told Reuters in May that the LSE is working on a new type of listing structure that would make it more attractive for Saudi Aramco to join.