Glencore paves way for £10bn flotation

 
City A.M. Reporter
PRIVATELY held commodities giant Glencore is considering listing in the first half of next year, in an IPO that could raise around £10bn.

Glencore, the world’s biggest commodity trader, has been preparing to go public after issuing a $2.2bn (£1.bbn) convertible bond last year.

The group, which yesterday posted a strong jump in nine-month profit, is considering an IPO that would likely launch off the back of full-year results in March or April, according to two people familiar with the matter who declined to be named.

Switzerland-based Glencore declined to comment.

While no final decision has been made on the size of the offering, it could raise around £10bn, one source said, making it one of the biggest London flotations on record.

The IPO could to be a dual listing in London and Hong Kong, another source said. Morgan Stanley, Citigroup and Credit Suisse are expected to be involved in the listing.

In the credit markets, the cost of insuring Glencore’s debt against default fell, which analysts said was sparked by the news about possible timing of the IPO.

Five-year credit default swaps tightened 30 basis points to 215 basis points, the tightest levels since May.

“Whilst we wouldn’t expect the proceeds to be put towards debt reduction, we consider the increased transparency and additional funding source should provide comfort to credit investors,” analyst Matthew Robbins at RBS said Another analyst said an IPO of Glencore would likely not take place until it completed a spin-off of its gold assets. In August, Glencore unveiled plans for spinning off or listing its Kazzinc gold assets, which could be worth more than $5bn, next year.