Glencore IPO to create almost 500 instant millionaires?

Commodities trader Glencore is set to go public - making some of its senior staff very rich indeed (on paper). But that's supposedly not the point...

by Emma Haslett
Last Updated: 20 Nov 2012
Glencore, the world’s largest commodities trader, is expected to launch its long-awaited IPO on the London and Hong Kong stock exchanges later this month. This should result in some big smiles at Glencore’s Switzerland HQ: if the company's valued at around $60bn (£36.6bn), as expected, its 485 directors will each be worth, on paper, an average of £103m each. CEO Ivan Glasenberg should become an instant paper billionaire. Although they won't see any of this cash for a while - the key short-term priority is to give Glencore even more financial firepower...

If you're unfamiliar with Glencore, you’re not alone: the firm has been dubbed the ‘biggest company you’ve never heard of’. Founded by Mark Rich in 1974 (the same Mark Rich who was indicted for trading oil with Iran, then pardoned by Bill Clinton, causing outrage), it earns its money trading commodities. It's the largest of the world’s big four independent oil dealers, and owns big stakes in various massive mining companies, including Xstrata. Last year its turnover was $145bn - which, as the Sunday Times pointed out yesterday, is more than the GDP of New Zealand.

Some thought the company might put off its listing after all the market volatility caused by the Japanese earthquake, but rumour has it that it will publish its formal ‘intention to float’ on Thursday. And it sounds like there’ll no shortage of willing buyers: among those allegedly keen for a piece of the Glencore pie are fund manager BlackRock and the Abu Dhabi Investment Authority.

Despite the huge numbers involved, Glencore insists that this is not an exercise designed to make its management even richer. The company will only float a fifth of its shares (which will, admittedly, raise between $10bn and $12bn), and all concerned have agreed not to sell their stakes for the next five years; as one source pointed out: ‘no one is taking any money off the table’. It’s more about freeing up liquidity so Glasenberg can go on a shopping spree; a deal for the other two-thirds of Xstrata is one of the options being mooted.

One downside of going public, of course, is that Glencore may find itself under much closer scrutiny. It's already under fire for allegedly thinking about offering a non-exec post to Tony Hayward, the former BP boss who left the company amid a storm of criticism over his handling of the Gulf of Mexico oil spill...

 

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