Advisers to Saudi Arabia's national oil company Aramco have recommended London as the venue for the listing, several people familiar with the matter told Reuters on Thursday. The New York Stock Exchange is unpopular because US listing rules worry the Saudi authorities.
Aramco will be the largest IPO in history, with a goal of raising $100 billion. The final decision on the location of the listing will be presided over by Crown Prince Mohamed Ben Salman, who is in charge of radical economic reforms in Saudi Arabia, according to people familiar with the matter.
Saudi Arabia's Vision 2030 plan seeks to move away from oil dependence and promote economic diversification. Listing 5 per cent of Aramco is an important part of the plan. The sources added that the Saudi authorities took into account not only financial factors but also the interests of shareholders and the company when deciding on the location of the listing.
Consultants compared the listing plans in London and New York and submitted Aramco for reference, with the final proposal likely to be submitted to the government in the fourth quarter, the source said.
The Financial Conduct Authority (FCA) plans to create a new listing category for sovereign state-controlled companies, improving London's chances of winning the huge IPO.
One source said it was a clear overture that London was ready to welcome Aramco and needed its IPO to attract more sovereign entities. At the same time, it also proves that London is still a good place to do business after Britain leaves the EU.
The proposed reforms by regulators will make London more attractive to the Aramco and other Gulf states considering listing oil assets, including Oman and Abu Dhabi.
The FCA proposal will be considered by October 13 and the new rules will be announced by the end of the year.
Aramco is not keen to list on a third exchange, such as Asia, according to a source. They prefer a dual listing process involving Tadawul in Riyadh and the London Stock Exchange.
Aramco, the London Stock Exchange and the New York Stock Exchange all declined to comment.
Bankers expect Aramco's listing plans to become clearer at the meeting of the Saudi Public Investment Fund (PIF) in Riyadh on October 24-26, according to a source.
Others said Aramco executives, including the chief executive, would meet in London on Aug. 3 to regularly review ongoing business activities.
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