World's largest diversified commodities trader sets IPO price range at 480 to 580 pence per share
Abu Dhabi's Aabar Investments
has committed to invest $850m n Glencore
International AG's $10bn initial public offering
(IPO), becoming the biggest cornerstone investor in the
offering, according to a term sheet seen by Reuters on
Government of Singapore Investment Corp (GIC), which is
already a Glencore bondholder, has injected $400m into
the IPO, making the Singapore fund the second-biggest
Such investors back many Asian listings, committing to take
large, guaranteed stakes and in return agreeing to a lock-up
period during which they will not sell their shares. In
Glencore's offer, cornerstones have agreed to a six months
lock-up, the term sheet added.
The "accounts have agreed to subscribe as cornerstone
investors for shares at any price in the range. The
tranche...was oversubscribed," the term sheet showed.
Glencore, which set a price range of 480 to 580 pence each
for the offer, said it had struck agreements with cornerstone
investors who will take up around 31 percent of the total offer,
one of the largest cornerstone books to date.
Middle Eastern funds have played a big role in Asian IPOs of
late and some are sitting on handsome profits from their
Last year, Kuwait Investment Authority ploughed $1
bn into AIA Group Ltd's IPO, which has generated about a
33 percent return over the past six months.
Cornerstone investors commit to investing in an IPO before
its price is determined. The dominance of mutual funds in the
United States and European IPO markets precludes the need for
cornerstones there, so this kind of early investor is unique to
BlackRock Inc has agreed to invest $360m, the
term sheet showed, while Eton Park and York Capital have agreed
to invest $200m each.
UBS Private Bank, Zijin Mining and fund manager
Pictet & Cie have agreed to buy $100m worth of shares in
Glencore. Fund manager BlackRock, GIC and Zijin have already
invested in Glencore's convertible bonds.
Other cornerstone investors include Credit Suisse Private
Bank and Och Ziff, both agreeing to buy $175 million worth of
shares, the term sheet showed.
Usually, cornerstone investors take up about 20 percent of
medium-size IPOs. But in Agricultural Bank of China Ltd's
record $22.1bn IPO last year, about 25 percent
was sold to cornerstones.
"The demand from cornerstones was incredibly strong. It's
evidence of the momentum that is building up in the deal. There
is no shortage of interest," one source familiar with the
Glencore offer said.
The presence of cornerstone investors also helps to generate
demand from institutions and retail investors.
The presence of traditional money managers such as Fidelity
and Pictet as cornerstone investors has surprised some.
"People are seeing the momentum building in the deal and
some are a bit concerned that they may not receive what they
want," the person added.
Some cornerstone investors were brought into the deal
directly by Glencore's chief executive, Ivan Glasenberg, the
"Glasenberg is very adapt at developing relationships with
key players globally. For some, it's starting from ground zero
and leveraging the bank relationship, but a lot of the big
important funds, Glencore already knows these people," the
Some big names that failed to show up as cornerstone
investors include, Qatar Investment Authority and China
Investment Corp . Talks with China's sovereign wealth
funds were stymied by the funds' cumbersome processes for
deciding on and approving major investments, another source said.
Glencore AG is the company which emerged from Marc Rich + Co., after a management buyout in 92/93. Marc Rich was semi-forced to sell his majority shares after legal problems in the USA, where he was eventually pardoned by Bill Clinton. Marc Rich laid the foundations of his success with his dealings with Ayatollah Khomeini's Iran and apartheid South Africa - amongst others. Marc Rich was also the creator of the oil spot market, without which consumers would still be at the mercy of major oil companies and producers!