Glencore is set to ignite stock flotations boom in New Year

By ELLIOT WILSON
Updated: 04:18 EST, 31 December 2010

London is preparing for a bumper year of stock flotations in 2011, with commodities trader Glencore expected to top the list, writes Elliot Wilson.

In 2010, 89 companies, from Essar Energy to grocery firm Ocado, sold shares as confidence returned to the City. In total, £10.1billion was raised – a 400 per cent jump over 2009 figures. But next year could be even better.

Glencore remains the name on the lips of every investor. The privately held and famously secretive Swiss firm is touted to complete a £6.5billion-£7.5billion IPO in March or April – although one company insider insisted that the company is ‘not in a rush’.

Lucky: Glencore founder Marc Rich was indicted for tax fraud and later pardoned by Bill Clinton

Glencore is tipped to sell up to 20 per cent of the group to new investors, which would value the whole firm at as much as £40billion. The float would make Glencore’s 485 owner-partners, all current employees, fabulously rich.

Together, they own 100 per cent of the company, with chief executive Ivan Glasenberg controlling around 15 per cent. With Glencore valued at up to £40billion, that could make Glasenberg’s stake worth – on paper at least – around £6billion.

Glencore’s flotation garners interest for other reasons. It has a colourful history, founded in 1974 by Marc Rich, a commodities trader indicted for tax fraud and later pardoned by Bill Clinton. Rich sold his shares in Glencore in 1994.

Glencore also controls 35 per cent of another Swiss firm, the London-listed coal and ferrochrome miner Xstrata, and would dearly love to buy its minority partner outright. An IPO would bring that aim a step closer.

Glencore says an outright acquisition, given Xstrata’s current market cap of £46billion, is unlikely for financial reasons. But insiders are still pursuing a full merger, which will be far easier after Glencore is listed, boosting financial transparency.

Investors are also eyeing a host of other London listings in 2011. Vedanta Resources is likely to re-explore the flotation of its Zambian copper business, while Kazakhstan’s sovereign wealth fund, Samruk-Kazyna, is likely to spin off up to 20 per cent of energy firm Kazmunaigaz.