Drop in commodity prices ‘not affected’ Glencore’s flotation

The world’s largest diversified commodities trader last week unveiled the much-anticipated prospectus for the initial public offering, detailing plans to raise funds in a dual listing in Hong Kong and London. The two-part, three-inch thick prospectus totals 1,908 pages.

Commodity price volatility since last week has prompted market worries over Glencore’s planned IPO, set to be London’s largest ever, with fund managers last week sensing an opportunity to drive down the price.

Mr Glasenberg said the decline in commodity prices was “due to some froth” in the market and had not affected demand for the IPO.

“We’ve had strong demand, I don’t think we can say much more than that,” Mr Glasenberg said.

“We haven’t seen much pullback with the recent drop in commodity prices,” added Mr Glasenberg, whose stake could be worth $10bn after the listing later this month.

The rout in commodity markets has battered UK mining stocks.

Glencore’s listed holdings, worth around £32bn when the IPO process began, have seen their total value slip to £30.7bn.

Xstrata alone, in which Glencore owns a 34.5 per cent stake, has seen its shares fall more than 10 per cent since the start of the month.

Glencore has already lined up buyers for all the shares in its planned float, but part of that success is due to the relatively small stake in the company being placed with funds and to Glencore’s size, which makes it a must-buy for many.

The company is ditching its long-standing partnership structure in favour of a public listing which would make it easier to reward partners and conduct acquisitions.

Mr Glasenberg said areas they were focussing on included grains and oil refineries.