Glencore sets IPO price range to raise up to $10 billion
By Elzio Barreto
HONG KONG (Reuters) - Glencore International AG <GLEN.UL> has set the price range for its London and Hong Kong IPO slightly lower than previous guidance, enabling it to raise up to $10 billion, three sources told Reuters on Wednesday.
The world's largest diversified commodities trader set a price range of 480 to 580 pence per share for the IPO, which would value Glencore at $48-$58 billion before the proceeds of the IPO were included, said the sources with direct knowledge of the plan.
They declined to be identified because the terms were not yet public.
Research from two banks underwriting the commodity trader's IPO last month said it is already worth as much as $69 billion, with its earnings set to double in two years.
The long-awaited listing, which could be London's largest to date, will push Glencore into the public eye and will turn publicity-shy executives including chief executive Ivan Glasenberg, a former coal trader, into paper billionaires.
CORNERSTONE'S LINE UP
The company could raise up to $8 billion from the sale of new shares in a primary offering, while its partners planned to raise about $2 billion in a secondary sale, the sources said. That would value Glencore at about 8 to 10 times estimated 2011 earnings, based on the average forecast of the three banks underwriting the IPO.
The base offer excludes a 15 percent or $1.5 billion over-allotment option. Including that greenshoe over-allotment option, Glencore had been aiming to raise up to $12.1 billion according to its intention to float document release last month.
Twelve cornerstone investors had agreed to buy $3.1 billion worth of Glencore stock, just above 30 percent of the total, one source said. Such investors back many Asian listings, committing to take large, guaranteed stakes and hold them for a minimum period of time.
Abu Dhabi's International Petroleum Investment Co (IPIC) will be the biggest cornerstone investor, with Government of Singapore Investment Corp (GIC) <GIC.UL>, U.S. fund manager BlackRock Inc <BLK.N>, and Credit Suisse Group AG <CSGN.VX> and UBS AG <UBSN.VX> private banks also taking part of the group.
Glencore has also signed up hedge funds Och-Ziff Capital Management Group <OZM.N>, Eton Park and York Capital.
Founded in 1974 by trading sensation and later U.S. fugitive Marc Rich, Glencore has until now held on to a fiercely prized tradition of public discretion, so investors will be poring over its prospectus for details on the company from its existing investors to its risks and details on its trading.
Glasenberg has never disclosed exactly how much of the firm he owns, though he is expected to be shown in the prospectus to be the top shareholder. Reports have put Glasenberg's stake as high as 15 percent. It will also become clear whether former Chairman Willy Strothotte retains a major stake or not.
Investors polled by Reuters said Glencore may pay a high price for its privacy, with its low profile as corporate governance fears damage its ability to achieve a top price for its stock.
The prospectus is also expected to include details of Glencore's trading in the first three months of the year, along with details of gross fees paid to its advisers -- the first indication of how much the commodities giant will pay its bankers in one of the biggest paydays for the sector this year.
Citigroup <C.N>, Credit Suisse and Morgan Stanley <MS.N> are the joint global coordinators for the offer.
Conditional trading of shares is set to begin on May 19, according to a term sheet seen by Reuters last month.
Glencore is expected to be fast-tracked into the FTSE 100 <.FTSE> bluechip index at close of business on the first day of trading, given its size and share of the FTSE all-share index. It will be the first company in 25 years to make the leap and only the third ever, after BT <BT.L> and BG <BG.L>.
(Additional reporting by Denny Thomas and Fiona Lau in HONG KONG and Clara Ferreira-Marques in LONDON; Editing by Chris Lewis and Lincoln Feast)