Glencore Gains in London Trading, Paring Glasenberg’s Losses

Glencore International Plc shares gained for the first time in three days in London trading, paring the decline in the value of Chief Executive Officer Ivan Glasenberg’s stake to about $900 million over the period.

Glasenberg, 54, owns 15.7 percent of the trader that ended more than three decades as a closely held company last month with an initial public offering. The stock rose 0.6 percent today, after falling as much as 4.4 percent. His stake is worth about $8.3 billion, compared with $9.2 billion on June 13.

BlackRock Inc. (BLK) and Abu Dhabi’s Aabar Investments PJSC are among so-called cornerstone shareholders to have lost about $310 million of the value of their $3.1 billion investment in the London and Hong Kong float because of the stock’s 10 percent slump from its IPO price. Glencore reported first-quarter profit of $1.3 billion on June 14, a result Nomura International Plc said was disappointing.

“We expect the current quarter could also disappoint,” Deutsche Bank AG analysts Grant Sporre, Rob Clifford and Gaetan De Buyer, wrote in a report today. They cut their price estimate for the stock to 620 pence from 650 pence and maintained a “buy” rating. “A weak second quarter is likely to see share- price performance face headwinds over the near-term.” First- half results are due Aug. 25.

Glencore fell 5.4 percent yesterday and 4.5 percent June 14. Today’s 475.8 pence close values the Baar, Switzerland-based company at 32.9 billion pounds ($53.1 billion).

Biggest IPO

Glencore started trading May 19 after selling stock at 530 pence apiece for $10 billion in the world’s biggest IPO this year.

Glasenberg, an accounting graduate, has been at Glencore since 1984 and CEO since 2002. He was part of a management-led buyout of the business from founder and former fugitive U.S. financier Marc Rich in 1994. The IPO also created billionaires in directors Daniel Mate, Telis Mistakidis, Tor Peterson and Alex Beard. Glasenberg is the biggest holder with 1.086 billion shares.

The value of Glasenberg’s stake at the time of the IPO exceeded what the founders of Google Inc. and Blackstone Group LP (BX) reaped in their IPOs. Stephen Schwarzman’s holding in Blackstone was $8.8 billion when the New York-based private- equity firm went public in 2007, while Google founders Larry Page and Sergey Brin held $3.28 billion and $3.27 billion of the Internet search company’s stock at its 2004 IPO.

‘Overpriced’ Stock

Glencore, which buys and sells commodities such as coal, grains and metals, employs 2,700 people at trading units in 40 nations and about 54,800 people at industrial operations in more than 30 countries.

The Standard & Poor’s GSCI Index of commodities tumbled the most in a month yesterday as the price of oil fell to its lowest in almost four months. Glencore trades about 3 percent of the world’s oil.

Glencore is “overpriced” and a range of 360 pence to 400 pence for the stock “is not unreasonable,” Ben Wedmore, an analyst at MF Global FXA Securities Ltd. in Tokyo, wrote today in a report. He rated the stock a “sell” as he initiated coverage.

Glencore’s first-quarter earnings before interest, tax, depreciation and amortization of $2 billion were 6 percent lower than Nomura’s estimate, analyst Paul Cliff said in a June 14 note. Deutsche Bank said today Glencore’s adjusted earnings before interest and tax missed its estimate by 8 percent.

The “key negative” from the earnings report was a 20 percent decline in profit at its metals and minerals trading unit, Deutsche Bank said.

Citigroup Inc., Credit Suisse Group AG and Morgan Stanley managed the IPO as global coordinators, along with Bank of America Corp. and BNP Paribas SA as joint bookrunners. Barclays Plc, Societe Generale SA and UBS AG were co-bookrunners.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

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