Glencore International PLC, the world's largest commodities trading company by revenue, aims to raise between US$9 billion and US$11 billion in an initial public offering ahead of a dual listing, and will use part of the proceeds to up its stake in its Kazakh zinc unit, according to a term sheet seen by Dow Jones Newswires on Thursday, MarketWatch reports.
The company will use around US$5 billion of the proceeds from the IPO for capital expenditure over next three years and around US$2.2 billion will go toward increasing its stake in mining firm Kazzinc Ltd. and reducing debt, according to the term sheet. Apart from its 50.7% stake in Kazzinc, a Kazakh zinc producer, Glencore owns 34% in London-listed mining giant Xstrata PLC (XTA.LN).
The Swiss firm's planned dual listing in London and Hong Kong comes at a time when commodities prices are hovering around high levels, and the deal is set to supersede Hutchison Port Holdings Trust's deal to be the largest IPO globally so far this year, although it pales in comparison to Agricultural Bank of China Ltd.'s (1288.HK) jumbo US$22.1 billion Hong Kong and Shanghai last year. Hong Kong tycoon Li Ka-shing's Hutchison Port Holdings raised US$5.5 billion in Singapore last month.
Glencore plans to launch a primary listing on the London Stock Exchange and a secondary listing on the Hong Kong stock exchange, the term sheet said, adding around 2.5%-10% of the offering will be sold to Hong Kong retail investors. Around 15%-20% of the company's shares will be freely traded after the listing, with up to US$8.8 billion being raised from London, and US$2.2 billion from Hong Kong, according to the term sheet.
There is a greenshoe option to increase size of the offering by 10% in the event of strong demand, which would boost the deal to as much as US$12.1 billion.
The company, which received approval to list in Hong Kong early this month, plans to set an indicative price range and start roadshows around May 4 and price the deal on May 19, the term sheet said.
Roadshows for the Hong Kong IPO will be held in Hong Kong, Singapore, China and Australia, a person familiar with the situation said earlier. The roadshow is the official bookbuilding period when the final price for an IPO is set.
The company is expected to become a constituent of the FTSE 100 by the end of the first trading day via a "fast entry rule," the term sheet said, adding the company is also expected to gain access to some MSCI stock indexes.
As part of the IPO, Glencore's board and executive directors will be barred from selling their shares in the company for five years, while the lock-up period for senior managers' s shares is two to four years.
Citigroup Inc. (C), Credit Suisse Group AG (CS) and Morgan Stanley (MS) are the joint global coordinators and joint bookrunners of the deal, the term sheet said.
Glencore is a leading force in the supply of commodities and raw materials including aluminum, copper, oil and wheat that has been closely owned and operated by a small group of partners since its founding 37 years ago.
A US$2.2 billion convertible bond offering at the tail end of the global financial crisis valued the company at US$35 billion. The firm's enterprise value is likely around US$50 billion to US$60 billion, another person familiar with the matter said Friday.
Some big anchor investors that bought Glencore's convertible bonds in 2009 are set to own shares in Glencore after the IPO, because they have the right to convert their bonds into Glencore shares after the listing. These investors include the Government of Singapore Investment Corp., China's Zijin Mining Group Co. (2899.HK) and BlackRock Inc. (BLK). Holders of convertible bonds that are converted to shares after the IPO will be subjected to a lock-up period of 90 days, according to Thursday's term sheet.
Glencore's revenue rose 36% to US$145 billion in 2010 and its net income rose 39% to US$3.8 billion, reflecting the recovery of commodity prices.
The company will use around US$5 billion of the proceeds from the IPO for capital expenditure over next three years and around US$2.2 billion will go toward increasing its stake in mining firm Kazzinc Ltd. and reducing debt, according to the term sheet. Apart from its 50.7% stake in Kazzinc, a Kazakh zinc producer, Glencore owns 34% in London-listed mining giant Xstrata PLC (XTA.LN).
The Swiss firm's planned dual listing in London and Hong Kong comes at a time when commodities prices are hovering around high levels, and the deal is set to supersede Hutchison Port Holdings Trust's deal to be the largest IPO globally so far this year, although it pales in comparison to Agricultural Bank of China Ltd.'s (1288.HK) jumbo US$22.1 billion Hong Kong and Shanghai last year. Hong Kong tycoon Li Ka-shing's Hutchison Port Holdings raised US$5.5 billion in Singapore last month.
Glencore plans to launch a primary listing on the London Stock Exchange and a secondary listing on the Hong Kong stock exchange, the term sheet said, adding around 2.5%-10% of the offering will be sold to Hong Kong retail investors. Around 15%-20% of the company's shares will be freely traded after the listing, with up to US$8.8 billion being raised from London, and US$2.2 billion from Hong Kong, according to the term sheet.
There is a greenshoe option to increase size of the offering by 10% in the event of strong demand, which would boost the deal to as much as US$12.1 billion.
The company, which received approval to list in Hong Kong early this month, plans to set an indicative price range and start roadshows around May 4 and price the deal on May 19, the term sheet said.
Roadshows for the Hong Kong IPO will be held in Hong Kong, Singapore, China and Australia, a person familiar with the situation said earlier. The roadshow is the official bookbuilding period when the final price for an IPO is set.
The company is expected to become a constituent of the FTSE 100 by the end of the first trading day via a "fast entry rule," the term sheet said, adding the company is also expected to gain access to some MSCI stock indexes.
As part of the IPO, Glencore's board and executive directors will be barred from selling their shares in the company for five years, while the lock-up period for senior managers' s shares is two to four years.
Citigroup Inc. (C), Credit Suisse Group AG (CS) and Morgan Stanley (MS) are the joint global coordinators and joint bookrunners of the deal, the term sheet said.
Glencore is a leading force in the supply of commodities and raw materials including aluminum, copper, oil and wheat that has been closely owned and operated by a small group of partners since its founding 37 years ago.
A US$2.2 billion convertible bond offering at the tail end of the global financial crisis valued the company at US$35 billion. The firm's enterprise value is likely around US$50 billion to US$60 billion, another person familiar with the matter said Friday.
Some big anchor investors that bought Glencore's convertible bonds in 2009 are set to own shares in Glencore after the IPO, because they have the right to convert their bonds into Glencore shares after the listing. These investors include the Government of Singapore Investment Corp., China's Zijin Mining Group Co. (2899.HK) and BlackRock Inc. (BLK). Holders of convertible bonds that are converted to shares after the IPO will be subjected to a lock-up period of 90 days, according to Thursday's term sheet.
Glencore's revenue rose 36% to US$145 billion in 2010 and its net income rose 39% to US$3.8 billion, reflecting the recovery of commodity prices.