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Qatar eyes Glencore stake as IPO talk heats up

London, February 28, 2011

Glencore, the world's largest commodities trader, is briefing analysts ahead of a possible mega-float which could involve Qatar taking a stake.

If it goes ahead, an initial public offering (IPO) of Glencore could value the company at as much as $60 billion according to Liberum Capital estimates, making it one of the biggest listings ever seen in London.

Qatar, one of the sovereign wealth funds flagged as a possible 'cornerstone' investor, is considering investing in Glencore, the country's prime minister said on Monday. It would be holding a meeting with Glencore in Doha later in the week, the prime minister added.

A public listing would allow Glencore, a privately held partnership, to keep growing even if its partners wish to leave. It would bolster the Swiss-based trader's balance sheet, reassuring credit-rating firms, and allow it to make major acquisitions using shares as payment.

'While no final decision has been taken, an IPO remains one of the options,' one of the sources told Reuters.

Glencore's senior management team led by 54-year-old chief executive Ivan Glasenberg is meeting sell-side analysts in London 'over a couple of days', the source added.

'This is a presentation to analysts of the company and its operations. It is educational.'

Glencore could float 20 per cent or more of the firm, possibly split between London and Hong Kong, raising up to $16 billion.

That would represent a huge payday for investment banks - perhaps $300 million to $400 million - but an even bigger bonanza for the 500 or so partners who own the firm. Their shares could be worth up to $120 million on average.

Glencore, whose one-third holding in mining group Xstrata is a key asset, would also start talking to possible 'cornerstone' investors who would be expected to subscribe to large stakes, another source close to the situation said.

'There will be some reaching out, some preliminary conversations are going to be taking place in the near term about that. Maybe the company will go and meet one or two funds they are interested in,' the second source added.

Speculation that an IPO could be done before Easter, which falls at the end of April, was premature and it could equally come after that, the second source said.-Reuters




Tags: IPO | investment | Stake | Glencore | commodities trader | Qatar sovereign wealth fund |

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