Glencore International AG, the commodities trader planning the year's biggest initial public offering, said the share sale in London and Hong Kong this month may value the company at about $61 billion.

Glencore plans to sell shares at 480 pence ($7.90) to 580 pence each, the Switzerland-based company said Wednesday in a statement. The mid-point of the range indicates a market value of $61 billion upon listing, with final pricing due about May 19. Glencore expects the shares to trade in London on May 24.

The company, ending more than three decades of operating as a closely held partnership, may raise about $10 billion in the sale, making it the largest IPO since General Motors Co sold stock in November. So-called cornerstone investors agreed to buy about 31 percent of the shares on offer, Glencore said.

The sale has "one of the largest cornerstone investor participations ever achieved for an IPO", Chief Executive Officer Ivan Glasenberg said.

The price mid-point values Glencore at about $52.5 billion before it receives the IPO proceeds, based on 6 billion shares outstanding before the sale. Four analyst reports last month from banks advising on the offering gave an average valuation range of $52.3 billion to $68.7 billion.

"We might be towards the lower end of the range," John Meyer, an analyst at Fairfax IS in London, told Bloomberg. "A lot of these cornerstone funds have been promised a good deal here and if you price at the top of the range you risk maybe messing that up and breaking that promise."

As much as 13.9 percent of the company will be publicly tradable after the IPO, according to a sale document sent to potential investors.

The IPO was announced April 14, the same week that Goldman Sachs advised a retreat from commodities, saying the risks of investing outweighed potential gains. The Standard & Poor's GSCI Total Return Index of 24 commodities has beaten bonds, stocks and the dollar every month since December, the longest run in at least 14 years.

Glencore's first-quarter trading performance "continued to benefit from improved market conditions, as also experienced in the final months of 2010", the company said Wednesday.

Glencore, which trades commodities including coal, oil and metals, plans to sell about $7.9 billion of new stock while existing holders may sell an additional $2.1 billion in shares for tax purposes and to repay loans. The company said last month it would use the funds for expansion and acquisitions.

The IPO includes an overallotment option, known as the greenshoe, of 10 percent of the offer. Cornerstone investors are subject to a lock-up period of six months, Glencore said.

Bloomberg

(HK Edition 05/05/2011 page3)