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UK hands world's largest oil company Saudi Aramco $2bn loan to secure IPO

The UK Government has offered the world’s largest oil company a $2bn (?1.5bn) loan guarantee as the battle to host the Saudi oil giant’s market debut drags on.
The Treasury has admitted to finalising the details of the deal which comes amid a fierce battle between the world’s largest exchanges to secure what could prove to be the world’s largest initial public offering.
The timing of the significant loan has raised eyebrows because Saudi Aramco, the kingdom’s state-back oil giant, is yet to decide where to list 5pc of the oil behemoth in its market debut expected next year.
The float is a central piece within Saudi Arabia’s plans to overhaul its economic future in the wake of the global oil crisis which could leave prices depressed indefinitely.
The listing could raise up to $100bn through a joint listing on the Saudi exchange and a foreign partner, but complex rules around transparency has thrown into question which exchange will be able to offer the Saudis the best terms.
UK hands world's largest oil company Saudi Aramco $2bn loan to secure IPO

The UK Export Finance (UKEF) group said the loan guarantee will be used to help deepen trade ties

Credit:
Hamad I Mohammed/Reuters
The Saudis are considering a listing on the London Stock Exchange but ministers in Japan, China and the US are also pushing for their own exchanges to be considered.
President Donald Trump took to Twitter last week, tweeting: "Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!"
The Treasury denied a report in The Financial Times which linked the loan deal with the lobby efforts to secure the Saudi listing.
The UK Export Finance (UKEF) group said the loan guarantee will be used to help to support Saudi Aramco in buying more from the UK to help deepen trade ties.
A Government spokesperson said: “UK Export Finance works to increase UK exports by providing finance to overseas buyers of our goods and services. As part of this, we will be providing Saudi Aramco with support in the form of credit guarantees to procure from the UK.”
The spokesperson added that the loan will be followed in the coming months by a series of exporter events for UK companies to connect with Aramco “to fully realise the mutual benefits of this support”.
Prime Minister Theresa May travelled to Saudi Arabia earlier this year, alongside LSE chief executive Xavier Rolet, to discuss the flotation alongside other potential trade opportunities. The UK hopes to clinch a broader trade agreement with the Gulf Co-operation Council but officials say negotiations remain some way off.
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