Glencore International is starting the year’s largest initial public offering (IPO), valuing the company at as much as $60 billion, as Goldman Sachs Group urges a retreat from commodities and IPO investors shun the UK.
The Swiss commodities trader plans to sell as much as $11 billion in shares in London and Hong Kong, it said today in a statement. The IPO may value Glencore at about $55 billion to $60 billion, said people with knowledge of the sale, who declined to be identified because the information is private.
Goldman said this week the risks of investing in commodities outweigh potential gains, dropping its recommendation to buy a basket of raw materials including crude oil, copper, cotton and platinum. Three companies have shelved plans for a London IPO this month as Europe’s debt woes and a nuclear crisis in Japan sap investor demand.
“They have been a private-run company and made a truck- load of money and you’d have to think that these guys would have more market intelligence than most,” said Ric Ronge, who helps manage the equivalent of $1.3 billion at Pengana Global Resources Fund in Melbourne, adding that he will study the IPO pricing. “In the near term we wouldn’t be surprised if there was a correction or a pull-back but the long-term story is still very much intact.”
MURRAY AS CHAIRMAN
Glencore has named Simon Murray, South Pole adventurer and former Vodafone board member, as its non-executive chairman.
Murray was managing director of Hong Kong billionaire Li Ka-Shing’s Hutchison Whampoa and serves on boards including Richemont and Essar Energy. He holds the record for the oldest man to walk unsupported to the South Pole.
Glencore also named former BP Chief Executive Tony Hayward to lead a five-strong team of independent directors.
Investors considering backing what could be London’s largest-ever listing are likely to scrutinise the directors’ experience and ability to stand up to an executive team used to running a tight-knit partnership with little outside influence.
However, several directors have close links to Glencore. They include a former classmate of CEO Ivan Glasenberg, a former chairman of a Glencore subsidiary and a holder of the trading and mining giant’s convertible bonds.