LONDON, Nov 9 (Reuters) – Britain will provide $2 billion in credit guarantees to Saudi Aramco <IPO-ARMO.SE> so it can buy British goods and services more easily, but denied it was part of efforts to persuade the energy giant to list its shares in London.

The loan agreement comes as London Stock Exchange, with backing from Prime Minister Theresa May, competes to host part of Saudi Aramco’s initial public offering (IPO), which is expected to be the biggest float ever.

“This builds on previous support for UK exports as part of Saudi Aramco joint venture projects,” the government said in a statement.

A spokesman for Britain’s finance ministry said the guarantees were not part of the country’s attempt to secure the IPO for London.

The guarantees announced on Thursday were relatively big. Over the past five years combined, previous guarantees have totalled 14 billion pounds ($18 billion), a government spokeswoman said.

Asked what specific projects the guarantees would back, the spokeswoman said Britain would work with the company to identify initiatives which could include British exports.

Saudi officials have said domestic and international exchanges, including New York, London, Tokyo and Hong Kong, have been considered for a partial listing of the state-run firm.

Britain’s financial regulator has proposed new rules to allow sovereign-controlled entities like Saudi Aramco to have their own “premium listing” category while being exempt from requirements such as how much of a company has to be floated.

The government and the City of London are keen to win the listing as a boost to the country’s capital markets just as Britain is preparing to leave the European Union.

However, some fund managers oppose the proposals, which they say would erode the rights of minority investors.

“(Britain’s government) guaranteeing a loan to ARAMCO would be a further lurch in descent to mercantilism,” Nick Macpherson, who was top civil servant at the finance ministry until last year and is now chairman of C. Hoare and Co private bank, said on Twitter.

Crown Prince Mohammad bin Salman said last month that the IPO, part of an ambitious plan to diversify the Saudi economy beyond oil, was on track to go ahead in 2018.

The $2 billion facility is being finalised by UK Export Finance, a ministerial department which works to increase British exports by providing finance to overseas buyers of the country’s goods and services.

($1 = 0.7613 pounds)

(Additional reporting by William Schomberg; Editing by Alexander Smith and Robin Pomeroy)

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