Cornerstones line up for Glencore IPO
LONDON - An Abu Dhabi investment vehicle, managers of large hedge funds and a number of private Swiss banks are set to serve as "cornerstone" investors backing the $12 billion flotation of the commodity trader Glencore International AG, according to a person familiar with the matter.
The listing, which could be biggest ever in London, will be aided by strong support from cornerstones, who may buy nearly 30 percent of the shares sold - around $3.6 billion - if the listing raises its maximum target of $12.1 billion. Such investors back many Asian listings, committing to take large, guaranteed stakes and to hold them for at least six months.
Glencore, the world's largest diversified commodity trader, is preparing to float in London and Hong Kong, with a prospectus and an initial price range due to be released on Wednesday.
Several existing investors in Glencore's convertible bonds will also serve as cornerstones, including the United States-based fund manager BlackRock Inc, the Government of Singapore Investment Corp (GIC), and China's Zijin Mining Group Co Ltd, the person added. The issuance of the bonds 18 months ago was one of Glencore's first steps towards public life.
The final roster of cornerstones could still change before Wednesday, but is likely to include at least three large hedge funds as well as representatives of the private banking industry in the company's native Switzerland, the person said.
The commodity trader will also publish a price range that could place a minimum value on the company of less than $50 billion including new funds, the person said. That would be below a widely cited valuation of $60 billion, but within the range of $45 billion and $73 billion implied by Glencore's own figures.
Abu Dhabi's state fund, Mubadala Development Company, plans to invest about $16 billion this year. But the emirate could instead make its investment via Abu Dhabi Sources, or ADS, a recently established trading house that is targeting some of the same commodities that Glencore markets.
However, other sovereign wealth funds in Asia and the Middle East will not invest in the listing. Zijin is likely to be the only Chinese cornerstone, and Abu Dhabi the sole Middle Eastern backer, the person said.
Media reports have suggested state funds from China, South Korea, and Kuwait among others might invest, while Qatar said in March it was considering backing Glencore.
Last week sources with direct knowledge of the matter said Glencore was in advanced talks about a cornerstone role with China's State Administration of Foreign Exchange.
Reuters
(China Daily 05/03/2011 page17)
