Glencore to close book on £6bn float early
Commodities trader Glencore will close the books for its planned $11bn (£6bn) initial public offering a day ahead of schedule, underscoring strong investor demand for its shares despite volatile commodity markets.
According to details in a term sheet seen by Thomson Reuters IFR and confirmed by sources close to the deal, subscriptions to the IPO will now close on 17 May, though pricing will still go ahead as planned on 19 May, the day conditional trading begins.
No reason for the early close was provided in the term sheet, but one of the sources told Reuters on Friday the offer was already “multiple times covered” across the price range.
Typically, an early close is a positive sign. It will also give underwriters more time for the orderly allocation of shares to investors across the globe.
“Books will close one day earlier than previously announced. The only exceptions to be made are for investors with meetings thereafter,” the term sheet said.
Glencore declined to comment on the change to the listing, which is set to boost its firepower for deals but will also push the group into the public eye after 37 years and make its publicity shy executives paper multi-millionaires.
Order books for shares in Glencore, the world’s largest diversified commodities trader, were fully covered within hours of the start of the sale process last week, but part of that success is due to the relatively small stake in the company being placed with funds and to Glencore’s size, which makes it a must-buy for many.
Chief executive Ivan Glasenberg said on Thursday that the IPO had generated strong demand, dismissing agitation in commodity markets as “froth.”
“This is a good sign,” Alex Wong, a director with Ample Finance Group said of the change to closing dates. “But the retail demand for the offer is unlikely to be strong because of the recent slump in commodity prices.”
The retail portion of the IPO will be a maximum of two per cent and is likely to be well below that.
Commodity price volatility since last week has prompted market worries over Glencore’s planned IPO, set to be London’s largest ever, with fund managers last week sensing an opportunity to drive down the price.