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Wed 4 May 2011 11:57 AM

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Abu Dhabi's Aabar commits $850m to Glencore IPO

World's largest diversified commodities trader sets IPO price range at 480 to 580 pence per share

Abu Dhabi's Aabar commits $850m to Glencore IPO
London Stock Exchange

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

cornerstone investor.

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

previous investments.

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

person added.

"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

person added.

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.

Andre 8 years ago

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!