Glencore Chief Glasenberg to Own $9.6 Billion Stake Upon IPO

Glencore International CEO Ivan Glasenberg
Glencore International AG Chief Executive Officer Ivan Glasenberg. Source: Glencore International Plc via Bloomberg

Glencore International AG Chief Executive Officer Ivan Glasenberg will own 15.8 percent of the commodities company after its initial public offering this month, which may value his stake at about $9.6 billion.

Glasenberg, 54, will be the largest holder in Baar, Switzerland-based Glencore with 1.086 billion shares, according to the company’s prospectus. The IPO will also create billionaires in directors Daniel Mate, Telis Mistakidis, Tor Peterson and Alex Beard, the prospectus shows.

Glasenberg’s stake exceeds what the founders of Google Inc. and Blackstone Group LP 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.

Glencore’s top executives won’t be able to sell any of their stakes in the year following the IPO. They will be able to divest as much as 20 percent of their original holding over each of the next four years, the filing shows.

“There may be a begrudging admiration for the fact that Glasenberg is a multibillionaire, but he is tied in for five years,” Miriam Hehir, director of credit research at RBC Capital Markets in London, said by telephone. “The fact he has got such a huge stake in the business should be good for other investors really.”

Marc Rich

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 and is now heading a $10 billion IPO, the world’s biggest this year. Based on the mid-point of the pricing range, Glencore would be valued at about $61 billion upon listing, giving Glasenberg a stake of about $9.6 billion.

Mate and Mistakidis, co-directors of Glencore’s zinc, copper and lead unit, have stakes valued at about $3.7 billion each, based on the company’s estimated market value. Peterson is director of the coal and coke unit and his stake may be valued at $3.2 billion. The holding of Beard, director of the oil unit, may be worth $2.8 billion.

Goldman Sachs Group Inc.’s IPO, 12 years ago this week, valued then-CEO Henry Paulson’s stake at $219 million.

Commodities Rally

Glencore, which trades commodities such as coal, oil and metals, has trading units across 40 countries, as well as industrial operations and stakes in listed mining companies, including about 34 percent of Xstrata. The Standard & Poor’s GSCI Total Return Index of 24 commodities has beaten bonds, stocks and the dollar every month since December, the longest run in at least 14 years.

“Partners are not taking their money off the table,” Glasenberg said in an interview last month. “Is it the top of the cycle? Who knows, who cares? We are only potentially selling out in five years time so let’s worry about the market in five years time.”

Glasenberg, who was once a competitive walker and completed two Swiss triathlons at the age of 43, graduated in 1981 from the University of the Witwatersrand. He earned his accounting certification at Levitt Kirson, and a master of business administration degree from the University of Southern California in 1983, before joining Glencore a year later.

His annual salary is 925,000 pounds ($1.53 million), according to the prospectus. Non-Executive Chairman Simon Murray’s salary is 675,000 pounds.

Glencore plans to sell shares at 480 pence to 580 pence each, the company said today in a statement. Final pricing is due around May 19.

Analysts had estimated the company’s pre-IPO valuation at $52.3 billion to $68.7 billion, according to the average range from four reports last month by banks advising on the IPO.

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