David Hellier
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ADVISERS to Glencore are set to price the shares in the group's flotation at the bottom of the expected range.

As the banks working on the deal gauged investor support for what is the London market's biggest ever flotation, it became clear that the shares will be priced at a range that will value Glencore at nearer to $45bn (£27bn) than the $83bn or more that some bank advisers had estimated. That includes up to $12bn the firm is aiming to raise in new money with its London-Hong Kong listing.

Some analysts suggested that bankers on the deal could have allowed the valuation to become hyped as a negotiating tactic. Olivetree Securities' Christian Georges said: "What they've been doing quite clearly now is pushing up the target price so that once they take out 10 per cent for good measure, they still have the price they wanted in the first place."

There will be an official announcement of a price range tomorrow morning (Wednesday). Advisers say that fund managers who had heard the Glencore story were generally supportive. They especially warmed to chief executive Ivan Glasenberg's pledge that he wouldn't be selling any shares while he worked for the group.

The announcement tomorrow morning and the accompanying share prospectus is likely to confirm that Glasenberg (see picture above) is a billionaire through his shares in the commodities trader. The float has attracted interest from several sovereign funds, with Abu Dhabi set to become the biggest non-employee stakeholder after the IPO.

But despite blue-chip cornerstone investors including Fidelity, Capital Group and BlackRock, there has been scepticism from some fund managers about the market in general, about the riskiness of some of Glencore's earnings and about the longer-term prospects for the group.

Said Peter Davey, head of mining and metals research at Standard Bank:
"Few of the assets that Glencore owns are world class and a large component of its revenues come from low margin trading income. But the biggest problem is that the market is not all that convinced that the miners are going to the moon at the moment. So people are wondering why they need to chuck more money at the sector."