Commodities giant Glencore plans to raise up to US$11 billion from listings in London and Hong Kong, in what is set to be the world’s biggest initial public offering (IPO) this year, a report said yesterday.
The move comes as prices for some commodities hit record highs and makes Glencore, the world’s biggest commodities trader by revenue, the latest to seek a foothold in Hong Kong’s share markets to tap rich Chinese investors.
Glencore, which is based in Baar, Switzerland, will list about 20 percent of its shares in the offering, and expects to sell between 2.5 percent and 10 percent to Hong Kong retail investors, according to Dow Jones Newswires, quoting a term sheet.
The company is valued at US$60 billion.
It will use about US$5 billion of the proceeds for capital expenditure over the next three years and about US$2.2 billion to increase its stake in Kazakh mining firm -Kazzinc Ltd and reducing debt.
Glencore deals in commodities including oil, metals, minerals and agricultural products and employs almost 55,000 people in more than 40 countries. Founded in 1974 and initially focused on marketing commodities sourced from third parties, the firm has turned into the leading supplier by buying and developing mining, smelting, refining and processing production assets.
Among its major investments is a 34.5 percent stake in -Switzerland-based mining giant Xstrata.
The IPO comes as commodity prices sit at highs amid huge demand from Asia, particularly China and India, for resources to power their red-hot economies.
Oil is at two-and-a-half-year peaks, while the prices for iron, copper and aluminum are also riding high.
The listing in London, its primary listing venue, is expected to raise up to US$8.8 billion with US$2.2 billion from its Hong Kong listing.
However there is a greenshoe option that will allow the firm to raise up to US$12.1 billion in the case of strong demand, through an increase in the size of the offering by 10 percent.
Glencore will set an indicative price range for the shares sometime around May 4. Hong Kong stock exchange declined comment. The firm was expected to announce details of the listing later yesterday.
The IPO would be the world’s largest this year, doubling the US$5.5 billion listing in Singapore of Hong Kong billionaire Li Ka-shing’s (李嘉誠) Hutchison Port Holdings Trust (和記港口控股信托) last month.
However, it will be much smaller than the US$22.1 billion raised by Agricultural Bank of China (中國農業銀行) last year in a dual listing in Hong Kong and Shanghai.
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