Glencore has lined up a number of Asian sovereign wealth funds as "cornerstone investors" for its flotation on the London and Hong Kong stock exchanges next month, with the commodities company looking for a market price tag of up to $73bn (£44bn).
City speculation suggested that China Investment Corporation (CIC), Temasek of Singapore, and Korea Investment Corporation have agreed to underpin the float by buying large tranches of shares.
The identities of the sovereign investors, as well as detailed financial information about the hitherto secretive Swiss-based company, will be revealed in the flotation prospectus, expected to be published next week.
Glencore's disclosure that sovereign wealth funds are planning to come aboard will be a fillip for the gaffe-prone company, which has this week drawn fire over corporate governance and sexist remarks by its chairman, Simon Murray.
The prospectus, prepared by the company's financial advisers and lawyers, will reveal details of Glencore's contingent liabilities, ongoing litigation and risks that could face the business in the months and years ahead. Glencore's new board, with Murray at the helm, is thought to have met for the first time in Baar, Switzerland, on Wednesday and to have signed off the prospectus.
Analysts said that demand for Glencore stock would be strong among state-owned Chinese and Asian institutions, which are keen to diversify out of US government debt and to secure supplies of vital raw materials.
Jan Randolph, head of sovereign risk at IHS Global Insight, said: "The Chinese want to lock in supply chains and reduce their exposure to the dollar. They are seeking to buy mining companies outright in Brazil, Australia and elsewhere. Purchasing equity in Glencore is another way of acquiring influence over the supply of commodities, from copper to aluminium."
Randolph said that, over time, Chinese funds could build their stakes to between 10% and 15%, at which point they were "quite entitled to ask for board representation". He described CIC as "sitting on the top of the Christmas tree when it comes to investment institutions mandated by Beijing to invest abroad".
CIC is shortly to receive another $200bn to funnel overseas, on top of the $100bn it already has in its coffers. In 2009, the Chinese fund invested $800m in Noble Group, a Singapore-listed commodity trading and shipping company that bears similarities to Glencore.
Glencore has been dogged by controversy since it announced its plan to float two weeks ago. There was confusion after Lord Browne, the former BP chief, was chosen as chairman, only for him to drop out at the last minute – after his name had been leaked to Sky News and the BBC – apparently because of concerns about corporate governance.
The baton was then passed to Simon Murray, a Hong Kong businessman and former soldier in the French Foreign Legion, who sparked uproar when he said that he was reluctant to employ women in senior positions because they tended to go off on maternity leave. He later retracted his remarks after facing accusations of sexism from the business secretary, Vince Cable.
In the City, eyebrows have been raised over the appointment of Tony Hayward as senior independent director: he was head of BP at the time of the Gulf of Mexico oil spill disaster and is hugely unpopular in the US.
Standard Life was reported as saying that the Glencore board looked as if it was cobbled together at "the eleventh hour".
Pre-IPO research from banks such as Citigroup and Credit Suisse has surfaced that showed Glencore has been paying virtually no tax on its huge profits, thanks to an elaborate partnership structure and Swiss domicile.
Source: http://www.guardian.co.uk
City speculation suggested that China Investment Corporation (CIC), Temasek of Singapore, and Korea Investment Corporation have agreed to underpin the float by buying large tranches of shares.
The identities of the sovereign investors, as well as detailed financial information about the hitherto secretive Swiss-based company, will be revealed in the flotation prospectus, expected to be published next week.
Glencore's disclosure that sovereign wealth funds are planning to come aboard will be a fillip for the gaffe-prone company, which has this week drawn fire over corporate governance and sexist remarks by its chairman, Simon Murray.
The prospectus, prepared by the company's financial advisers and lawyers, will reveal details of Glencore's contingent liabilities, ongoing litigation and risks that could face the business in the months and years ahead. Glencore's new board, with Murray at the helm, is thought to have met for the first time in Baar, Switzerland, on Wednesday and to have signed off the prospectus.
Analysts said that demand for Glencore stock would be strong among state-owned Chinese and Asian institutions, which are keen to diversify out of US government debt and to secure supplies of vital raw materials.
Jan Randolph, head of sovereign risk at IHS Global Insight, said: "The Chinese want to lock in supply chains and reduce their exposure to the dollar. They are seeking to buy mining companies outright in Brazil, Australia and elsewhere. Purchasing equity in Glencore is another way of acquiring influence over the supply of commodities, from copper to aluminium."
Randolph said that, over time, Chinese funds could build their stakes to between 10% and 15%, at which point they were "quite entitled to ask for board representation". He described CIC as "sitting on the top of the Christmas tree when it comes to investment institutions mandated by Beijing to invest abroad".
CIC is shortly to receive another $200bn to funnel overseas, on top of the $100bn it already has in its coffers. In 2009, the Chinese fund invested $800m in Noble Group, a Singapore-listed commodity trading and shipping company that bears similarities to Glencore.
Glencore has been dogged by controversy since it announced its plan to float two weeks ago. There was confusion after Lord Browne, the former BP chief, was chosen as chairman, only for him to drop out at the last minute – after his name had been leaked to Sky News and the BBC – apparently because of concerns about corporate governance.
The baton was then passed to Simon Murray, a Hong Kong businessman and former soldier in the French Foreign Legion, who sparked uproar when he said that he was reluctant to employ women in senior positions because they tended to go off on maternity leave. He later retracted his remarks after facing accusations of sexism from the business secretary, Vince Cable.
In the City, eyebrows have been raised over the appointment of Tony Hayward as senior independent director: he was head of BP at the time of the Gulf of Mexico oil spill disaster and is hugely unpopular in the US.
Standard Life was reported as saying that the Glencore board looked as if it was cobbled together at "the eleventh hour".
Pre-IPO research from banks such as Citigroup and Credit Suisse has surfaced that showed Glencore has been paying virtually no tax on its huge profits, thanks to an elaborate partnership structure and Swiss domicile.
Source: http://www.guardian.co.uk
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