Glencore International AG, the largest commodities trader, is poised to talk with potential key investors in an initial public offering as briefings for analysts begin, said people with knowledge of the plan.
Discussions with funds including China Investment Corp. and Qatar Investment Authority are about to start, said one of the people, who declined to be identified because the talks are private. Mining analysts in London are attending a two-day briefing in the city from today, with some visiting sites owned by Glencore this week, two people said.
Glencore is studying a $10 billion IPO for London and Hong Kong, probably by the third quarter, led by Citigroup Inc., Credit Suisse Group AG and Morgan Stanley, said another two people with knowledge of the talks. While no other banks have yet been hired, Bank of America Merrill Lynch, JPMorgan Chase & Co., UBS AG and Liberum Capital Ltd. are among those involved in preliminary work on the IPO, according to the people.
Qatar is considering investing in Glencore, Prime Minister Sheikh Hamad Bin Jasim Al Thani told reporters in Doha today.
“Glencore is very much run as a black box and it’s quite opaque so there has to be a degree of transparency for people to get comfortable with it,” said Ric Ronge, who helps manage the equivalent of $1.3 billion at Pengana Global Resources Fund in Melbourne. “It just comes down to the price and having the confidence it’ll be run as a public company given that it’s currently a private company.”
Chief Executive Officer Ivan Glasenberg, Chief Financial Officer Steven Kalmin and other senior management will brief analysts, all four people said. It’s unclear whether banks attending are assured a role in the proposed IPO, they said.
Simon Buerk, a spokesman for Glencore, declined to comment when contacted by phone yesterday. A China Investment Corp. official in Beijing declined to comment or be named. Calls to Qatar Investment Authority went unanswered.
The London-based Sunday Times yesterday reported Glencore had opened talks with the Chinese and Qatari sovereign wealth funds. Liberum Capital valued the Baar, Switzerland-based company at $47 billion to $51 billion in a July report.
Glencore sold convertible bonds in December 2009 for the first time, raising $2.2 billion and attracting investors including BlackRock Inc., Government of Singapore Investment Corp., Greenwich, Connecticut-based private equity investor First Reserve Corp., and Zijin Mining Group Co.
“We will probably convert the bonds into stock” should the IPO proceed, Zijin Mining’s Vice Chairman Lan Fusheng said in a phone interview. “Glencore is a good company operationally and in profitability.”
Glencore employs 2,000 people in its trading units and more than 50,000 at its industrial operations at 15 plants in 13 countries, according to a company fact sheet on its website.
The trader also owns 34 percent of Swiss miner Xstrata Plc and controls mines and metals plants on five continents. The Xstrata stake is worth $23 billion at the current share price.