Massive demand for Glencore shares

Swiss commodity trader Glencore had lined up buyers for all of the shares in its planned $11-billion mega float only a day into the sale process, two sources close to the deal said.

Bucking a recent trend for struggling European listings, which have seen investors wait until very late in the usually two-week book-build to place orders, Glencore has already received demand for all the shares it is offering, including a 10% over-allotment option, the sources said. They said it was too soon to say where in the indicated 480 pence to 580 pence a share range the much-anticipated offering would be priced on May 18.

That range, announced on Wednesday, values the company at £36.5-billion at the midpoint, below the price at which some analysts have valued Glencore.

"The books are covered on the full deal size, including the greenshoe," said one source.

"Given the amount of interest we have seen in the transaction, we thought we would be covered pretty early but I think it reflects that the price range was right."

The London and Hong Kong listing, in which Glencore is looking to raise around $7.9-billion from new shares and $2.1-billion from existing shares, will boost its firepower for deals amid a boom in commodity prices. But it will also push it into the public eye after 37 years as a discreet private company.

Glencore's estimate of its future market capitalisation puts the company just above the mid-point of a wide $45-$73-billion value implied in its intention to float. The mid-point of analyst research was around $60-billion, though that excludes proceeds from the offering.

Before the start of book-building, Glencore struck agreements with cornerstone investors who will collectively buy around 31% of the total offer, one of the largest cornerstone books to date. The largest investor, Abu Dhabi's IPIC Aabar, which has already committed $850-million to the listing, also plans to invest an additional $150-million.

Glencore was not available for comment.