Glencore launches biggest share offer this year

14th April 2011, Comments 0 comments

Swiss commodities giant Glencore on Thursday announced the world's biggest initial public offering so far this year, with a stockmarket listing in London and Hong Kong to raise up to $11 billion.

"The global offer is expected to represent between 15 and 20 percent of the company's post-IPO issued share capital," the Baar-based group said in a statement.

The offer aims to raise between $9 billion and $11 billion (6.2-7.6 billion euros) is to be completed in May and values the world's biggest commodities trader by revenues at up to $60 billion.

If the IPO is over-subscribed, the company has an option to expand its shares allotment by 10 percent, bringing the potential total sum raised to around $12 billion.

"Over many decades, we have developed Glencore into an unrivalled global integrated commodity producer and marketer, active in almost every bulk commodity market," said Ivan Glasenberg, the group's chief executive officer.

"An IPO is the next logical step in our development and strategy. It will provide us with the financial flexibility to capitalise upon long-term growth opportunities throughout our business and achieve further sustainable growth," he added.

In an interview with AFP, Glasenberg said that the company's IPO plans appear to have been well received.

"Myself and the CFO have been on a preliminary roadshow ... and the response has been very strong," he said.

The group said it would use the funds raised to increase its stakes in JSC Kazzinc, a zinc producer with core operations in east Kazakhstan, from 50.7 percent to 93 percent.

The Kazzinc transaction is worth $3.2 billion and would include $1.0 billion in new Glencore shares and $2.2 billion in cash.

In addition, the group plans to use proceeds on other expansion projects as well as to pay off debts.

Glencore's IPO comes as commodity prices sit at highs amid huge demand from Asia, particularly China and India, for resources to power their red-hot economies.

Oil is at two-and-a-half-year peaks, while iron, copper and aluminium are all hovering around multi-year highs.

The IPO is expected to be the world's largest this year, doubling the $5.5 billion offering in Singapore of Hong Kong billionaire Li Ka-shing's Hutchison Port Holdings Trust.

RBC Capital Markets said the IPO details are "largely in line with market expectations" and gave the move a positive rating.

Founded in April 1974 by trader Marc Rich, Glencore operated initially out of a small apartment in central Switzerland's Zug canton before quickly emerging as a major player in commodities.

From metals, minerals and crude oil, the group moved into agricultural goods and it also purchased its own mines.

Through the 1990s and 2000s, Glencore acquired key assets, and now owns mines for zinc, copper, iron, aluminium, coal as well as oil assets.

It also owns about a third of Anglo-Swiss mining giant Xstrata.

The group employs almost 55,000 people in more than 40 countries and is involved in all stages of the commodities supply chain -- from extraction to refining and supplying.

Glencore posted net profits of $3.8 billion for 2010 on revenues of $145 billion.

© 2011 AFP

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