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Canada Plays Up Its Natural Resources Expertise In Aramco IPO Pitch

Canada Plays Up Its Natural Resources Expertise In Aramco IPO Pitch
Canada’s deep experience in natural resources as part of a broader offer to help the kingdom with its shift away from oil dependence is played up by the Toronto Stock Exchange's efforts to win a slice of the massive Saudi Aramco public listing.
Strong trading interest from outside the country, its leading position in oil and gas equity capital raising, and "a customized regulatory environment for resource issuers" are talked up by the pitch documents by TSX.
Broader than just for a slice of the Aramco IPO is the Canadian pitch. As Canada Inc seeks a role in delivering the kingdom's broader Vision 2030 plan, TMX executives have been joined by senior executives from some of the country's biggest banks, brokerages and other financial players on several trips to the kingdom, the most recent in late March.
Including in mining and infrastructure, they are focused on convincing the Saudis that Canada excels in 10 of the 12 areas they have targeted for development under that plan, one source directly involved in the Canadian pitch told the media.
"We feel that we have put TMX and Canada's best foot forward and we continue to promote our strengths in pursuit of business opportunities in the region and around the world," TMX said in a statement.
Securities lawyers say that its geography and geopolitics could be its best chance of winning a part of the biggest IPO ever, expected to raise about $100 billion as early as next year.
The sources said TMX’s case could be bolstered by a recent change in U.S. law that allows those affected by the September 11, 2001 attacks to sue the Saudi government, even while the exchange is widely considered an underdog in a race that has also excited larger exchanges in London, New York, Tokyo, Hong Kong and Singapore.
"We are inoffensive from a political perspective," said Sarah Gingrich, a Calgary-based partner at Fasken Martineau, who has previously worked in Dubai with Saudi clients for international law firm Freshfields.
After the U.S. Congress overrode a veto by former President Barack Obama, that law, the Justice Against Sponsors of Terrorism Act, came into effect in September.
Seeking to hold it responsible for business and property damage as a result of the attacks, in which Saudi has long denied involvement, a group of insurers has since renewed a $6-billion lawsuit against the kingdom.
The so-called "terror law" is one consideration in the country's decision on whether to list in the United States, said Saudi energy minister, Khalid al-Falih, in a March 17 interview with the Wall Street Journal.
Whether the issue was discussed during U.S. President Donald Trump's recent visit is also not clear.
While the London Stock Exchange is working on a completely new type of listing structure to woo Aramco, Nasdaq, which is a technology partner to Saudi Arabia's exchange, is also pitching for the listing.
The TMX pitch documents show that second behind the NYSE's 44 percent, Canada-listed oil and gas companies raised 22 percent of global energy financing over the past five years.
Noting that TSX-listed companies raised 28 percent more than fourth-placed LSE, the documents put Canada in third place behind Chinese and Hong Kong exchanges, and the United States for total capital raised in 2016.
Still it is dwarfed by the much larger U.S. market even though Canada boasts of strong interest from both institutional and retail investors and significant expertise in oil and gas financing.
TMX says that a total market capitalization of C$325 billion ($239 billion) is the value for the oil and gas companies listed on its main TSX exchange and the junior TSXV.

Christopher J. Mitchell

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