Singapore Exchange holds talks with Saudi Aramco on secondary listing: Sources

Reuters with CNBC's Dan Murphy
Ore Huiying | Bloomberg | Getty Images

Singapore Exchange has held talks with Saudi Aramco on a secondary listing, two sources familiar with the matter told Reuters on Monday, after the oil and gas company suggested last week it would likely simultaneously list on more than one exchange.

The planned listing next year of up to 5 percent of Aramco is expected to be the world's biggest initial public offer (IPO). Saudi Energy Minister Khalid al-Falih said last week the company was evaluating concurrent listings on more than one exchange.

The sources told Reuters that the SGX talks were still at an early stage as Saudi Aramco reviews several markets including New York, London, Hong Kong and Japan.

"This transaction is very open and in the public space. The key thing is there is quite a bit of time for due diligence and SGX is keen to play up its international appeal in this sector," said one source.

The Singapore Exchange woudn't confirm that it is in talks with Aramco, but the stock exchange is talking up its credentials as the global competition for the IPO heats up.

"SGX is the world's most international exchange and offers unique access to South East Asia's markets," an SGX representative told CNBC in an emailed statement.

"Singapore is a well-regulated international financial center with strong corporate governance," the SGX statement added.

2018 is the window we're looking at for Saudi Aramco IPO: Al-Falih

Aramco, which is slated to list in 2018, could also interest Singapore's sovereign wealth fund GIC, another source told Reuters, but a decision on the size of stake would depend on Aramco's financial details and valuation.

Saudi Aramco and GIC declined comment.

The SGX Pitch

SGX has been positioning itself as a global competitor for lucrative secondary listings, touting Singapore's stable political environment, robust currency and strong regulatory framework as compelling fundamentals.

But the competition around the world is strong, and experts say SGX may need to do more to raise its global profile and further improve liquidity to effectively compete.

The exchange has taken measures to boost market liquidity and attract large IPOs but it has mostly become a large Asian center for Real Estate Investment Trusts listings.

But it's also playing up its credentials as a major oil-trading hub, the largest after New York and London, as well as Asia's swing refining center and an emerging LNG trading hub.

Singapore is home to 80 percent of the top 30 oil and gas companies.

Last November, SGX and Japan's TOCOM announced they would join forces in order to co-list Asian LNG and electricity futures.

Singapore has so far been seen to lack a big enough consumer base to warrant a real trading hub, although investors and market participants appreciate Singapore's well established trading regulations, as well as the fact that English is its operating language.

—CNBC's Dan Murphy contributed to this report.

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