Tags:

UPDATE 1-Glencore Set to Price IPO at 530 Pence -sources

Wednesday, 18 May 2011 02:16 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

* Seen pricing at midpoint of 530 pence - sources

* Final price due to be announced on Thursday

* On track to be London's largest ever listing

By Kylie MacLellan and Clara Ferreira-Marques

LONDON, May 18 (Reuters) - Trader Glencore is set to price its bumper $11 billion market debut in the middle of its initial range, balancing appetite for its shares with concerns from some investors over valuation, sources familiar with the matter said.

"The market understands it will be priced at 530 pence," one of the sources said on Wednesday.

At that price -- the exact midpoint of Glencore's original 480 to 580 pence range, but just below the middle of narrower guidance issued earlier this week -- the world's largest diversified commodities trader will be worth 36.5 billion pounds ($59 billion).

Glencore, which is also listing in Hong Kong, is in the final stage of the potentially record-breaking initial public offering of what would be a 16.4 percent stake, assuming no overallotment and no conversion of its convertible bonds.

Dozens of its advisers and bankers worked through the night and into Wednesday on the complex process of allocating the shares after books closed on Tuesday, a day early.

Final discussions on the price started late on Wednesday afternoon and will likely last into the night, the sources said.

The decision will be announced to the market on Thursday, before conditional trading in the shares begins in London.

With a 10 percent overallotment option likely to take the total size of Glencore's offering to $11 billion, it is set to be London's largest-ever listing, overtaking Russia's Rosneft, which raised $10.6 billion in 2006.

Its market value will also propel the commodities trader straight into London's FTSE-100 index of bluechip shares.

CONDITIONAL TRADING

Glencore has said there is strong demand for its stock and had enough buyers to cover its offer within hours of starting the sale process earlier this month. It now has enough several times over, with the book "multiple times" covered.

The trader has said demand was not rattled by the sell-off in commodities, which it dismissed last week as "froth".

Several top fund managers, however, have said much of the appetite has come from tracker funds which will have to buy into the trader once it is in the FTSE index. Cornerstone investors have also already signed up to buy almost a third of the shares.

Fund mangers told Glencore this week to set a price around the midpoint, or face a drop in value in its first weeks as a listed company.

The group's top executives and cornerstone investors are tied in through lock-ups of at least six months, but share performance will matter to Glencore, particularly if the company is to use the offering as planned to pursue acquisitions, not least any potential offer for peer Xstrata.

Sources close to the matter, however, said on Tuesday that investors were being told to place orders at or above 530 pence to ensure they are allocated stock.

"The price seems to have struck a nice balance between where accounts were prepared to move to and where the company was happy to sell," the first source said.

Starting at 530p -- also the final price pencilled in by spread betters -- Glencore is expected to track higher in grey market, or conditional trade. BGC Partners earlier indicated an opening level of 545 to 552 pence per share.

Glencore, which will trade as GLEN.L, has consistently declined to comment on the pricing process.

Founded in 1974 by trading sensation Marc Rich, Glencore has until now held on to a tradition of discretion. Its publicity shy top executives, however, will become paper millionaires with the initial public offering, with Chief Executive Ivan Glasenberg's stake worth $10 billion

Glasenberg and other existing shareholders will control around 80 percent of the company after listing. (Editing by David Cowell and Alexander Smith)

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved