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Sovereign Wealth Lines Up Major Stake in Glencore IPO

Glencore International, the world’s largest commodities trader, has already lined up a group of key institutional investors to take as much as a quarter of its $9 billion to $11 billion public offering next month, say people familiar with the matter.

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As part of its “pre-marketing” period, which began about two weeks ago and is now winding down, Glencore bankers have lined up so-called cornerstone investors from a variety of sovereign wealth funds, these people say.

The list is likely to include funds in Singapore, China, Kuwait, other parts of the Middle East, and investors in Hong Kong, added the people.

Together, the investors will purchase at least $2.5 billion worth of pre-IPO shares and perhaps closer to $3 billion, added these people, who said that the cornerstone group will then be unable to sell shares for six months.

The pre-marketing period—during which investment bankers meet with potential investors alone—precedes the trader’s global road show, which is set to begin next week.

Details of the cornerstone investment group and the exact prices they are expected to pay will be released the morning of May 4 in London as part of Glencore’s investment prospectus, say the people familiar with the matter.

Glencore’s global road show, during which company management will crisscross the globe for more formal meetings with investors, will kick off that day, add these people.

Management will divide itself into two teams, one of these people said, the first to be led by CEO Ivan Glasenberg and the second by CFO Steve Kalmin.

A Glencore spokesman declined to comment on the details of the road show or the cornerstone investor group.

Glencore and its bankers, a consortium led by Citigroup, Credit Suisse, and Morgan Stanley, will spend most of May pitching the deal. The pricing of the deal could come around May 18 or 19, at least a week before the shares begin to trade, said the people familiar with the matter.

Trading is expected to start on the London Stock Exchange on May 24, according to these people, and a secondary listing on the Hong Kong Stock Exchange is likely to begin on May 26.

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