Glencore sails straight into FTSE with £6.7bn flotation
World's largest commodity trader names Simon Murray as its new chairman
Friday 15 April 2011
Glencore has unveiled plans for a mammoth listing next month that will make the Swiss commodities trader only the third company ever to warrant immediate inclusion into the FTSE 100 index of leading shares.
The dual London and Hong Kong float will give investors the chance to buy up to 20 per cent of the Barr-based firm, raising up to £6.7bn in one of London's biggest public offerings on record. With an expected market value of around £36bn, Glencore would account for more than 1 per cent of the entire FTSE All-Share index, thus winning it a coveted blue-chip berth, a feat only achieved twice before with the listing of BT in 1984 and BG in 1986.
The listing will mark the newest chapter in the evolution of the business founded in 1974 by Marc Rich, the oil trader indicted for tax evasion, charged with tax fraud and then pardoned by Bill Clinton at the end of his presidency.
Mr Rich has long since left – he sold his interest in 1994, when the business was renamed Glencore – and the trading house has grown into a key player on the commodity markets.
Today, Glencore boasts an addressable share of around 60 per cent of the zinc metal market, 50 per cent of the copper metal market and 45 per cent of the lead metal market.
In addition to other metals and minerals, the firm has interests in the oil, coal and agricultural products, and owns more ships that the Royal Navy. Going public will give the firm the firepower to compete in the global rush for resources and earn vast fortunes for the 500-odd shareholders in the business. Once listed, Glencore said it would look to maintain or raise its total ordinary dividend every year. Currently, it expects to declare an interim payout of £214m alongside its half-yearly results in August.
News of the float was accompanied by details of a revamped board, with the former BP boss Tony Hayward, who resigned from the oil giant amid controversy in the wake of the Gulf of Mexico oil spill last year, being named as the company's senior independent director.
Peter Coates, the chairman of the Australian gas company Santos, Leonhard Fischer, the chief executive of the financial services group RHJ International, William Macaulay, the chairman of the energy investor First Reserve, and the Hong Kong businessman Li Ning were named as independent non-executive directors.
The initial announcement was silent on the identity of the new non-executive chairman, with Simon Murray, the former Vodafone board member, being named to the post hours later in the afternoon. Glencore chief executive Ivan Glasenberg and chief financial officer Steven Kalmin will sit on the board as executive directors.
"Over many decades, we have developed Glencore into an unrivalled global integrated commodity producer and marketer, active in almost every bulk commodity market," Mr Glasenberg said. "An IPO is the next logical step in our development and strategy. It will provide us with the financial flexibility to capitalise upon the long-term growth opportunities throughout our business and achieve further sustainable growth."
Glencore's inclusion in the leading share index will mean the demotion of the smallest of the current crop of FTSE 100 stocks. Though subject to market fluctuations between now and the time of its float, companies in the firing line include the private-equity group 3i, which was at the bottom of the index in terms of market value on Wednesday night, and Investec, the financial services group which was second from the bottom, according to figures from the index compiler.
Glencore in numbers
25 The number of years since a listing led to a company's immediate inclusion in the FTSE 100 index.
£5bn The estimated value of the stake held by its South African chief executive Ivan Glasenberg.
485 The number of employers who own shares in the company and who will net a windfall in the IPO.
35 per cent The stake Glencore holds in the mining giant Xstrata, which is also listed on the FTSE 100.
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