Tags: Glencore | ipo | commodity

Glencore Catapulted Into FTSE 100 in London Debut

Tuesday, 24 May 2011 07:19 AM

 

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Swiss commodities giant Glencore made a tepid stock market debut on Tuesday but still became the first company in 25 years to join the FTSE 100 index on its admission.

The London Stock Exchange welcomed the historic flotation which it said valued the Swiss giant at $59.2 billion (42 billion euros).

A FTSE Group spokesman confirmed that Glencore would take its place in the prestigious FTSE 100 index at the open on Wednesday.

However, the group's shares dipped 0.84 percent to close at 525 pence on Tuesday, which compared with last week's introduction price of 530 pence.

Glencore, whose shares launch in Hong Kong on Wednesday, raised about $10 billion last week in the world's biggest initial public offering (IPO) so far this year.

The firm, which is based in Baar, Switzerland, has now become only the third company to be admitted under the FTSE 100's fast-entry rule.

"As one of the largest IPOs in history, we are delighted Glencore has chosen the London Stock Exchange," LSE Chief Executive Xavier Rolet said in a statement.

"Its London listing will give it exposure to the world's deepest pool of international capital; entry to one of the world's most tracked and traded indices, the FTSE 100; and access to a global community of financial and market expertise.

"The size and success of Glencore's flotation shows London is very much open for business and that its investor base has the appetite and capability to support large fundraisings."

The Swiss company is the world's biggest commodities trader, with products including oil, coal, gold and foodstuffs, but also owns a number of mines worldwide.

Conditional trading — unofficial trading of the shares on condition that they would eventually be fully listed — began last week in London.
Glencore, the biggest global commodities trader by revenue with $145 billion in 2010, secured $3.1 billion from so-called cornerstone investors, who had subscribed to 31 percent of the shares on offer.

These investors include sovereign wealth funds in Singapore and Abu Dhabi, asset managers and private banks.

The arrival of Glencore in the FTSE 100 will meanwhile bump engineering company Invensys into London's second-tier FTSE 250 index.

"Glencore is the largest mining-industry IPO ever and the biggest share offer in any industry in the UK and gives it an initial market value of roughly $59 billion," said Atif Latif, director of trading at Guardian Stockbrokers.

"Thus far, trading has not been as expected. This may be due to recent weakness in the sector as a whole, as most of the commodity market has been selling off for the last few days."

He added: "I don?t think they (Glencore) will be worried as it is still early it will take some time for buyers that are on the sidelines who will watch for the first few days to gauge entry levels."

The company set last Thursday the final price for the IPO at 530 pence, at the middle of the 480-580 pence range which it had announced early in May.

In all, 1.2 billion shares or 16.9 percent of the group's total shares are being floated. The remaining 83.1 percent remains in the hands of management and employees.

© AFP 2014

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