£7bn richer: a good day at the office for Ivan Glasenberg
Jonathan Brown on the staggering flotation that made Glencore boss a multi-billionaire
Friday 20 May 2011
The world's biggest wealth generation exercise unfolded yesterday on the screens of Glencore's Swiss headquarters and its London dealing rooms. By the close, its traders could count among their number five new billionaires while dozens of partners had shares worth more than £150m. Hundreds more saw notional fortunes transformed into vast amounts of cash.
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The chief beneficiary of yesterday's £7bn flotation of the commodities giant is Ivan Glasenberg. The 54-year-old South African, who joined the company as an oil trader after a career in accountancy owns 16 per cent of the company, which controls movements of a huge chunk of the globe's energy, mineral and food resources through a complex business empire.
His estimated fortune of £7bn now rivals the gross domestic product of the Democratic Republic of Congo, where his company owns a number of mines. Analysts were surprised when the share price fell back after impressive early gains, but investors had earlier oversubscribed the offer five-fold.
Despite this, by the close of the market at 4.30pm the company, which started life during the 1973 oil crisis, was valued at £36.5bn making its stock market listing the largest seen in the Square Mile.
The rewards for senior management dwarf those of other eras. The six Glencore chiefs will share £14bn – eclipsing the £700m held in stakes by eight senior executives at Goldman Sachs when it was floated in 1999.
Among the other big winners will be Daniel Mate and Aristotelis Mistakidis, who lead Glencore's zinc, copper and lead division. They now hold shares worth up to £2.4bn each.
Tor Peterson, director of the firm's coal and coke division is now reported to be worth £2bn while Alex Beard, the London-based head of oil, saw the value of his shares rise to £1.7bn. Famously private in its inner workings Glencore, based in the low-tax canton of Zug, has come under increasing public scrutiny as it prepares to raise money from the London and Hong Kong stock markets to help fund its expansion.
The company already has access to half the world's supplies of zinc, lead and copper, 10 per cent of its grain and three per cent of the oil supply; and in recent years it has cemented its control of the supply chain by buying up mines and other plant outright.
But the decision to go public means its environmental performance and business methods will also be scrutinised – particularly when shares go on sale on the open market next Tuesday and Glencore is propelled into the FTSE 100, where it will end up in the pension pots and investment plans of millions of Britons.
One reason for the share's lacklustre performance on a day when the FTSE enjoyed another healthy gain is a growing concern that the boom in the price of commodities may soon end. However, most believe the long-term prospects are good. And despite the disappointment in the dealing rooms the 23 banks led by Citigroup, Credit Suisse and Morgan Stanley which worked on the float will get a cut of the biggest fee pot in at least a decade, potentially totalling £170m.
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