Glencore nears final straight in IPO, eyes 530 pence
Trader Glencore is set to price its record $11 billion market debut in the middle of its initial range, balancing appetite for its shares with concerns from some investors over valuation, sources familiar with the matter said.
The market understands it will be priced at 530 pence, one of the sources said on Wednesday.
At that price -- the exact midpoint of Glencore's
Glencore is in the final stage of its potentially record-breaking and long-awaited initial public offering of what would be a 16.4 percent stake, assuming no overallotment and no conversion of convertible bonds.
Dozens of its advisers and bankers worked through the night and into Wednesday on the complex process of allocating the shares after books closed on Tuesday, a day early.
Final discussions on the price will start late this afternoon and will likely last into the night, the sources said.
The decision will be announced to the market on Thursday, before conditional trading in the shares begins in London.
Glencore, which will also be listing in Hong Kong, is set to be London's largest ever listing, and its market value will propel it straight into the FTSE index.
Glencore has said there is strong demand for its shares and had enough buyers to cover its offer within hours of starting the sale process. It now has enough several times over, with the book multiple times covered.
But several top investors have said much of that appetite was from tracker funds which will have to buy into the trading giant once it is in the bluechip index. Cornerstone investors have already signed up to buy almost a third of the shares.
They warned Glencore this week to set a price around the midpoint or face a drop in value in its first weeks as a listed company.
Though the group's top executives are tied in through lock-ups, share performance will matter to Glencore if the company is to use the offering as planned to pursue acquisitions, not least that of peer Xstrata
Sources close to the matter, however, said on Tuesday that investors were being told to place orders at or above 530 pence to ensure they are allocated stock.
The price seems to have struck a nice balance between where accounts were prepared to move to and where the company was happy to sell, the first source said.
Glencore has consistently declined to comment on the pricing process.
(Reporting by Clara Ferreira-Marques and Kylie MacLellan; Editing by David Cowell)
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