Instant View: Glencore pricing leaves room for rise on debut

Reuters

LONDON (Reuters) - Commodity trader Glencore <GLEN.L> has confirmed the price of its bumper $11 billion market debut at 530 pence a share.

Following are reactions to the pricing.

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LIBERUM CAPITAL MINING TEAM

"We feel the listing event may mark the end of this mini-sell off in both the sector and broader commodities.

"Its is clear some big macro worries have affected sentiment toward commodities and mining shares in recent weeks which have seen the sector lose 11 percent since the April highs.

"However, we also suspect the Glencore listing itself may have had an influence on commodity and mining equities pricing - specifically through hedge funds shorting commodities and mining equities to lower pricing for the IPO and the more routine selling down of other mining equities by funds to provide liquidity for IPO subscription.

"With the pricing now decided and the sector 11 percent cheaper, these trades have played out - refreshing valuations."

JOHN MEYER, ANALYST AT FAIRFAX

"The deal is priced to go. It is no surprise that it is oversubscribed, I think partly because of the competition created with the large number of brokers.

"I think it will have a good start in London and I think Glencore has a lot of positive attributes to show. There are some high risk areas of the business, but there are some clearly very good parts that underpin it."

On recent commodity market volatility: "I think the market is well balanced and commodity prices look likely to track sideways, which is very good news for the sector."

TIM DUDLEY, ANALYST AT COLLINS STEWART

"Obviously everything is priced to do well. I don't know whether 5-10 percent upside is in the bag or not, but certainly they are trying to please investors with the price.

"They talk about being oversubscribed but you don't know what kind of price that interest was all at.

"No surprises and it will be interesting to see how many people feel the need to buy the stock today because I get the impression that on a demand/supply basis there is a lot of interest in the stock and people have probably been scaled back.

"Whether people will rush to try and sort out that imbalance today or wait and buy over time it is hard to say.

"I suspect that if anyone is worried about volatility they would just downgrade their exposure to the sector. Overall exposure to the sector may be going down but you have taken this because it's too big to ignore."

ANDY DAVIDSON, METALS AND MINING EQUITY ANALYST, NUMIS SECURITIES

"They came in at a fairly realistic level and it was priced such that it would have some upside post flotation. I think they priced it such that there was that additional scope for people to come in and buy it afterwards and with it being 4 times oversubscribed ... the aftermarket support should be strong."

"I would expect it to be well supported. Sentiment in the commodity space is not what it was 3 months ago but I don't think it has turned full-on bearish and then there is the fact that if you want to play the commodity markets then why not play it with the world's biggest trader who has got all the inside lines, so the arguments still all seem to stack up."

PAUL GALLOWAY, SENIOR MINING ANALYST, SANFORD BERSTEIN

"It is as expected. The company and its advisers were saying it was covered very early, cornerstone investors were found and the index trackers made a difference -- so to date it has been a very successful IPO." (Reporting by Julie Crust, Kylie MacLellan and Clara Ferreira-Marques)