‘Mysterious’ commodities giant Glencore floats on FTSE 100
As Glencore becomes the first company in 25 years to be fast-tracked into the FTSE 100 Index, an investor tells Channel 4 News that despite being shrouded in mystery, it represents a good investment.
On Friday, billionaire boss Ivan Glasenberg (pictured), often described by analysts as secretive and enigmatic, took part in the LSE‘s market opening ceremony to mark the biggest stock exchange flotation in British history.
Glencore is the world’s biggest commodities trader, with products including oil, gas, coal, gold, aluminium, bauxite, nickel, iron ore, zinc, copper, grain, rice, sugar and foodstuffs. It owns a number of mines worldwide and a current market value of more than £36bn.
Mr Glasenberg, whose personal stake in the Switzerland-based group is worth around £5.8bn, will instantly become one of the world’s wealthiest people. The flotation will make four other executives instant billionaires.
However, shares in the company are still lower than their starting price of 530p after dropping to a low of 506p during conditional trading last week, before recovering to around 524p on Friday.
Robert Talbot, a city investor for Royal London Asset Management, said that the muted performace may be the result of the company targeting larger institutions instead of investors.
“It speaks more to the fact that they’ve been marketed only to the largest institutions at the moment, and they haven’t focused much of their attention at all on marketing themselves to small institutions or the general public,” he said.
And despite a muted performance at the stock exchange thus far, Mr Talbot he added that the company is a “potentially very attractive investment”.
“There’s a good combination of some underlying metals businesses and some trading businesses that have actually received some very good returns over the medium and longer term,” he said.
Controversy
In 1983, Glencore founder Marc Rich was indicted for tax evasion to the tune of $48m in taxes and charged with 51 counts of tax fraud, as well as running illegal oil deals with Iran during the 1979-1980 hostage crisis.
President Bill Clinton pardoned Rich, who had escaped the US during his prosecution and was living in Switzerland, in his last week in office.
Recently it has emerged that Glencore is involved in numerous controversies: in Belgium, a subsidiary is on trial for charges including “corruption of an international civil servant and criminal conspiracy” – charges it denies.
In Zambia, Glencore has been accused of avoiding tax on the copper it exports – which the company “refutes”.
And in Namibia, it is involved in a court battle with the state oil company Namcor.
Mr Talbot said that Glencore is aware that potential investors will demand more transparency regarding the claims.
He said: “As a public company, they will have to be far more transparent than they’ve actually been in the past. I think the company accepts that that is actually part of the price of going public.”
He added: “The company assert that there isn’t an issue (to answer) – they’re saying that to us very confidently.”