Looking for an independent voice on Glencore

 
David Hellier
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AMONG all the many big beasts advising on the forthcoming flotation of commodities trader Glencore, one firm stands out in its unusualness and lack of big beastliness, and that is Liberum Capital.

Liberum is an employee-owned investment bank whose Latin name means independent, whereas the rest of the advisers – including Credit Suisse, Morgan Stanley, Bank of America Merrill Lynch, BNP Paribas, Barclays Capital, Societe Generale and UBS – are all the bulge bracket banks, who offer placing power, share distribution and underwriting services alongside their advisory capabilities.

In a world where relationships are still all important, Liberum’s link to Glencore is Michael Rawlinson, a board director who heads the mining, resources and energy team. He joined from Cazenove after its merger with JP Morgan. There he had worked on the initial public offerings of BHP?Billiton, Xstrata, Vedanta and Anglo American.

Rawlinson also worked on the flotation of the Russian aluminium group Rusal, where Glencore chief executive Ivan Glasenberg is a director, and with Vallar, the mining group run by Nathaniel Rothschild.

As one adviser to the Glencore float put it: “Michael is a superb authority in the sector and he gives very straight advice.”

Last July Liberum came up with a $60bn (£37bn) figure for Glencore’s valuation, which has since become a benchmark. As we wrote yesterday, analysts at Credit Suisse and Barclays Capital have now suggested that Glencore could be worth as much as £48bn (including new money raised).

As yet, there is little research from analysts whose banks are not on the syndicate. But one industry afficionado who does have a view is Standard Bank’s mining analyst Peter Davey, who told me yesterday: “Glencore doesn’t deserve a premium rating.

“I think it should price at a discount to the miners. With them, you have real tangible earnings whereas here, a lot of the money is earned by traders who own the company and might leave after a time.”

With so little UK M&A happening at the moment, it looks likely that this Glencore flotation will dominate much of the discussion in the City over the next few weeks and there will be a heated debate over valuation (as well as the group’s corporate governance record), with some going for the £48bn or so figure and others, such as Davey, arguing for something closer to £35bn. It will be fascinating to see whether any of the syndicate member banks agree with Davey’s lower figure.

Just don’t hold your breath.