The Glencore millionaire club: trader valued at $61bn

Glencore's successful float this morning has made a lot of its staff very, very rich (on paper). But the extra visibility will bring new challenges, as it's already finding.

by James Taylor
Last Updated: 19 Aug 2013
Commodities trader Glencore finally launched its long-awaited public offering this morning: it looks as though the Swiss-based firm will be valued at about $61bn (that's £36.5bn), which would propel it straight into the FTSE 100 and create at least five paper billionaires within its senior team. Glencore insists that the reason for the float is to boost its war-chest for deals (by about $10bn, to be precise) and increase its corporate profile. And a listing will undoubtedly help in both respects. But there's a flipside to this too, as the row over the appointment of Tony Hayward, the 'sexist' comments of new chairman Simon Murray, and today's Daily Mail hatchet job prove...

You might argue that Glencore is one of the big European corporate success stories of our time. Chief exec Ivan Glasenberg and his partners have transformed an obscure commodity trader into one of the biggest natural resources companies in the world, involved at every stage of the process - from mining, to shipping, to trading. Turnover was a frankly ridiculous $89bn last year, which as we're constantly being reminded, is more than the GDP of New Zealand. As a result of this float - assuming it hits its target price, and chances are it will probably go higher - Glasenberg alone will be worth about $10bn on paper, while it's also likely to create three other new billionaires and literally hundreds of millionaires. Nice work if you can get it.

All of these freshly-minted plutocrats have promised not to sell their shares for at least five years (and Glasenberg has pledged not to sell a single share until he leaves office). So this is all slightly theoretical - if the company's value plunges during this period, they might not be able to translate this paper wealth into a fleet of new Ferraris. But numbers like these - and the potential for such conspicuous wealth - don't exactly chime with these grey and austere times. If most of us are seeing our household incomes shrink, it's bound to stick in the craw that a group of Swiss-based traders have suddently become richer than Croesus.

Now Glencore's tapping the public market for funds, it can't get away with operating behind a veil of secrecy, as it did before. And it has already had a slightly uncomfortable start to life in the public spotlight. Its appointment of ex-BP boss Tony Hayward as a non-exec provoked some (not entirely fair) controversy, while newly-appointed chairman Simon Murray's 'colourful' views on the dangers of employing young women also made the wrong sort of headlines. And today's Daily Mail story on the company might also be a harbinger of things to come: under the headline 'Greed Inc', the paper slams their copper mining activity in Zambia, and highlights the ongoing investigation into their tax affairs in the country. '[Investors are] already expressing concern about the enormous profits being generated by the firm at the expense of some of the world’s poorest people,' the paper rages, in its inimitable fashion.

There's likely to be plenty more where that came from now Glencore's a public company. If it's got any sense, it might want to start thinking a bit harder about ways to convince a sceptical world that it performs some kind of socially useful role.

PS. Reputation - creating it, maintaining it, and exploiting it - is the theme of the May issue of MT, out now.

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