October 26, 2020

DealBook: Glencore Prices Shares, Valuing It at $60 Billion

Glencore, the global commodities trader and miner, set the price range for its highly anticipated initial public offering on Wednesday at 480 pence to 580 pence a share, which at the midpoint values the company at about £36.5 billion, or roughly $60 billion.

The company aims to raise about $10 billion in its share issue in London and Hong Kong, with $7.9 billion coming from a primary sale. The rest of the shares will be sold by the company’s management.

Glencore is the world’s largest trader of commodities, dealing in metals like gold and copper, as well as energy resources like coal and oil. It also produces many of the commodities at its own mines, and holds about a one-third stake in the global miner Xstrata.

The company said that 31 percent of the offer, or $3.1 billion in shares, had already been subscribed to by cornerstone investors, who are locked in for six months after the offer.

More details are expected to be released on the investors with the publication of the London prospectus on Wednesday. The group is expected to include major sovereign wealth and hedge funds.

“We are pleased by the strong investor interest shown,” Ivan Glasenberg, Glencore’s chief executive, said in the company statement, adding that it was “one of the largest cornerstone investor participations ever achieved for an I.P.O.”

A prospectus will be issued May 13 in Hong Kong, the company said, where the issue is also open to retail investors. Shares are expected to start trading on about May 24 in London and May 25 in Hong Kong. If they are sold at the high end of the range cited on Wednesday, they would value the company at up to $65.8 billion.

The Hong Kong retail offer amounts to 31.25 million shares, or 2.5 percent of the total offer. Normally, when companies go public in Hong Kong, they are obliged to offer 10 percent of their shares through public subscription on the exchange, and up to 50 percent if the issue is oversubscribed — but Glencore has been granted a waiver.

Glencore reported $3.8 billion in profit last year, 41 percent higher than 2009. It notched revenue of $145 billion, up 36 percent from 2009. The company also reaffirmed its outlook for this year.

“Despite recent events in Japan and the Middle East, the directors remain confident that economic activity and commodity demand remain robust and that Glencore remains well positioned,” the company said, adding that it would still pay an interim dividend of $350 million in August.

Citigroup, Credit Suisse and Morgan Stanley are serving as joint global coordinators and joint bookrunners for the issue.

Glencore may opt for a 10 percent overallotment, it said, meaning that if demand is large enough, the company will issue additional shares worth about $1 billion.

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