Tags: Glencore | Near | Hiring | Eight | Banks | IPO

Glencore Said Near to Hiring Eight Banks for $10 Billion IPO

Tuesday, 22 Mar 2011 01:33 PM

Glencore International AG, the largest commodities trader, is close to hiring eight banks to manage its $10 billion initial public offering in London and Hong Kong, according to two people with knowledge of the transaction.

Bank of America Corp., Barclays Plc, BNP Paribas SA, Societe Generale SA and UBS AG may be named IPO bookrunners in addition to lead managers Citigroup Inc., Credit Suisse Group AG and Morgan Stanley, said the people, who declined to be identified because the information is private. Additional banks, including Liberum Capital Ltd., may be appointed with a lesser role, according to the people.

While a final decision hasn’t been made on the timing of the IPO, Glencore may press ahead as soon as April because preparatory work may be completed by end of this month, said the people.

Simon Buerk, a spokesman for Baar, Switzerland-based Glencore, declined to comment. A spokeswoman at Bank of America and spokesmen for Citigroup and SocGen declined to comment. Spokespeople for the other banks weren’t immediately available.

The value of Glencore’s 10 largest listed mining holdings have fallen as much as 12 percent to $27.8 billion from its February peak after Japan’s nuclear crisis. The value of the holdings rebounded to $29.6 billion as of 2:30 p.m. London time today.

Mining Holdings

Glencore’s holdings include a 34 percent stake in Xstrata Plc and an 8.8 percent interest in United Co. Rusal, the largest aluminum producer, according to its Dec. 31 annual report to bondholders obtained by Bloomberg News. The MSCI World Index of stocks is rising for a fourth-straight day, posting a 4.1 percent gain from its close on March 16.

Banks that underwrite equity sales in the U.K. and Hong Kong receive fees averaging 2.5 percent of the amount raised, according to data compiled by Bloomberg since 2005. At that rate, Glencore would pay $250 million to its IPO managers if the sale raises $10 billion, the amount the company was said to be seeking.

Larger stock offerings typically pay a smaller percentage to underwriters. Essar Energy Plc paid 2.25 percent to managers of its 1.3 billion-pound ($2.1 billion) London IPO last year, Bloomberg data show.

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