[miningmx.com] — Glencore International CEO Ivan Glasenberg said recent falls in commodity prices were due to “froth” in the market and demand for the company’s IPO, worth up to $11bn, was strong.
The world’s largest diversified commodities trader last week unveiled the much-anticipated prospectus for the IPO, detailing plans to raise funds in a dual listing in Hong Kong and London.
Some investors have suggested a sell-off across commodity markets could impact demand and pricing for the IPO.
The Reuters/Jefferies CRB index , a broad measure of commodity performance, has fallen 8% since hitting a near three-year high last week, including a 3% fall on Wednesday.
Speaking to reporters in Hong Kong via video-conference from London, Glasenberg said the decline in commodity prices was “due to some froth” in the market and underlying market fundamental remained strong.
Glencore set a price range of HK$61.24 to HK$79.18 for the Hong Kong portion of the IPO, setting aside at least 31.25 million shares for sale to retail investors in the Asian financial hub. The Hong Kong offer is set to start on Friday.
“The demand for commodities across Asia has played a key role in the growth of Glencore,” Glasenberg said.
“A secondary listing in Hong Kong will enable us to build long-term mutually beneficial relationships with Hong Kong investors, as we have with customers, suppliers and capital providers worldwide over the years.”
Glencore had previously set a 480p to 580p per share price range for the London portion of the offering. That values it at $60bn at the mid-point, which is below the price some analysts say the company is worth and was seen as an attempt to leave room for the stock to rise after the IPO.
A final price will be set on May 19.
Glencore lined up buyers for all of the shares in the offering a day after it started marketing the IPO to potential investors, two sources close to the deal told Reuters.
