Glencore's IPO set to get major support
By Elzio Barreto and Denny Thomas |
March 11, 2011, Friday
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Print Edition
Print Edition
GLENCORE'S plan to list shares in Hong Kong is expected to get strong support from market officials and regulators, with no restrictions necessary when the IPO filing heads to the city's listing committee.
A source with direct knowledge of the offering said Glencore is confident that the Hong Kong Exchanges & Clearing Ltd and the city's watchdog will back the deal, as the exchange has eased rules on mining companies and steadily increased the amount of foreign companies it reviews for initial public offerings.
While it changed certain rules last year, Hong Kong has been historically tough on listings by mining or commodity-related IPOs, fearing in part that the voracious retail crowd would get burned by a company it was unfamiliar with.
In December 2009, the Hong Kong Securities and Futures Commission stepped in on the over US$2 billion IPO of Russian aluminum producer UC RUSAL, slapping a restriction on the offering that would bar most retail investors from participating in the IPO. RUSAL's listing approval was also delayed.
Glencore, the world's biggest commodity trader, owns US$14.6 billion worth of mines, smelters and refiners around the globe, according to a research note by Liberum Capital. More than a third of its revenues come from its commodities trading business, according to the note.
That Glencore is a well-established and profitable player in its industry is expected to trump any concerns listing officials may have about its vast and complex business operations across the globe, the source said.
A separate source said on Wednesday the London-Hong Kong IPO is planned for May that could value the firm at US$60 billion.
Unlike major mining-focused indexes in Sydney and Toronto, HKEx had previously not permitted exploration companies to list unless they proved the existence of exploitable natural resource reserves, and laid out a clear production plan. The measure was meant to protect retail investors who lacked experience investing in miners.
Hong Kong's IPO market is heavy with so-called "Mom and Pop" investors - individuals from shopkeepers to housewives - who snap up hot stocks and IPOs.
A source with direct knowledge of the offering said Glencore is confident that the Hong Kong Exchanges & Clearing Ltd and the city's watchdog will back the deal, as the exchange has eased rules on mining companies and steadily increased the amount of foreign companies it reviews for initial public offerings.
While it changed certain rules last year, Hong Kong has been historically tough on listings by mining or commodity-related IPOs, fearing in part that the voracious retail crowd would get burned by a company it was unfamiliar with.
In December 2009, the Hong Kong Securities and Futures Commission stepped in on the over US$2 billion IPO of Russian aluminum producer UC RUSAL, slapping a restriction on the offering that would bar most retail investors from participating in the IPO. RUSAL's listing approval was also delayed.
Glencore, the world's biggest commodity trader, owns US$14.6 billion worth of mines, smelters and refiners around the globe, according to a research note by Liberum Capital. More than a third of its revenues come from its commodities trading business, according to the note.
That Glencore is a well-established and profitable player in its industry is expected to trump any concerns listing officials may have about its vast and complex business operations across the globe, the source said.
A separate source said on Wednesday the London-Hong Kong IPO is planned for May that could value the firm at US$60 billion.
Unlike major mining-focused indexes in Sydney and Toronto, HKEx had previously not permitted exploration companies to list unless they proved the existence of exploitable natural resource reserves, and laid out a clear production plan. The measure was meant to protect retail investors who lacked experience investing in miners.
Hong Kong's IPO market is heavy with so-called "Mom and Pop" investors - individuals from shopkeepers to housewives - who snap up hot stocks and IPOs.
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