From the Wall Street Journal Europe's The Source blog:
Swiss-based Glencore International may be staying tight-lipped on the potential timing of an initial public offering, but one of the worst kept secrets in commodities could be about to come out into the open.
An IPO is now a matter of when, not if; a merger with U.K.-listed miner Xstrata PLC remains a question of how.
If the world’s economy hadn’t slumped at the end of 2008 and financing hadn’t severely contracted, Glencore would more than likely have gone for a listing a long time ago. But the recovery in commodity prices following their tumble during the economic downturn and a strengthening of Glencore’s credit situation through debt refinancing activities left the company with time on its hands.
Glencore appears to have decided that the time to act has arrived.
Barring another devastating event with serious macro-economic consequences, the announcement of a proposed listing, in London and in Hong Kong, could come as early as next month.
The company has this week embarked on a number of roadshows in Europe in an effort to lock-in equity analyst support for its plans. Similar meetings will follow in Asia.
So far, it’s not been too tough a sell—Glencore’s net debt to Ebitda ratios are better, commodity prices are flying and key consuming industries like automotive, power generation and food processing are making a solid recovery.
The Baar-based producer and marketer of commodities ranging from metals, grains and oil reported yet another solid set of results earlier Thursday, no real surprise given the strength of pricing in the asset class.
Glencore didn’t provide individual breakdowns but it did say that metals and minerals provided the strongest increase to the company’s 2010 earnings before interest. Oil didn’t fare quite so well, with the company citing an “unusually stable price environment characterized by surplus refinery capacity and a weak freight market.”
Last summer’s drought in Russia and the CIS and the poor weather conditions in Australia meanwhile helped boost Glencore’s agricultural products segment significantly....MOREFrom Reuters:
Glencore profit jumps on higher commodity prices
* Net profit $3.80 bln vs $2.72 bln, revenue up 36 pct
* EBIT contribution from industrial assets jumps 72 pct
* EBIT contribution from marketing up 47 pct
* Net debt $14.8 billion vs $10.2 billion
* No update given on possible initial public offering
Glencore's [GLEN.UL] net profit jumped 40 percent in 2010, the world's largest commodity trader said, strengthening its hand for a possible stock market listing that could value it at about $60 billion.
Net profit at the trading, mining and resource investment conglomerate rose to $3.80 billion, boosted by higher prices for metals and agricultural products. Revenue grew 36 percent to $145 billion.
Company executives spent two days in London this week telling analysts about its business ahead of what could be Britain's biggest initial public offering (IPO) this year.
Sources familiar with privately-held Glencore's plans have said it could float 20 percent or more of its stock, possibly split between London and Hong Kong, raising up to $16 billion.
"These strong results will benefit any theoretical or public value of the currently private Swiss group," said Miriam Hehir, director of credit research at RBC Capital Markets....MORE
From the Sunday Times:
Glencore’s top staff could net $250m each after hint of IPO
The most senior employees at Glencore could reap nearly $250 million (£157 million) each if the secretive Swiss metals trading company goes ahead with an initial public offering (IPO).
Glencore, which owns a 34.5 per cent stake in Xstrata, the FTSE 100 miner, said yesterday that it had raised $2.2 billion in convertible bonds from private equity firms and sovereign wealth funds. The bonds will convert into Glencore stock, valuing the trading firm at $35 billion should it seek an IPO.
According to a bond prospectus published this year, Glencore’s leading 66 employees own 46.4 per cent of the company. Based on a $35 billion valuation, they would get an average of $246 million each.
There are other mechanisms for repayment of the bonds, but Glencore’s specific reference to an IPO is the strongest indication yet that it will seek a listing. If the company had simply been seeking to raise money, it could have sold normal bonds, but its decision to bring in a small number of possible future shareholders indicates that the partnership may be preparing a change of ownership structure....MORE
