Now it’s swapped those notes for equity – three years ahead of their maturity date – and taken on a two per cent stake in the company.
With Glencore shares trading 24 per cent below their list price of 530p before the announcement, the market has been looking for a vote of confidence. First Reserve’s bet – essentially that the shares will gain enough to be worth more than their conversion price by 2014 – is also a vote for Glencore’s model.
The opacity of how the company’s trading arm made money was one of investors’ key concerns prior to the IPO.
But First Reserve knows the company well – its chairman and chief executive William Macauley is a Glencore non-exec – and by backing up its confidence it’s providing a much-needed psychological boost.
True, First Reserve hardly struggled for investors willing to shift their stock, but its punt that the sell-off since listing has been overdone is enough for the shares to have regained almost a third of their lost ground during yesterday’s trades.
First Reserve is expecting its paternal conviction to be rewarded.
We trust its instincts.