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Glencore IPO: Sign of a Commodity Top?

Don’t be fooled by the unassuming appearance. This is the far-from-flashy headquarters of the world’s largest commodities trader, Glencore.

After 37 years, Glencore is stepping out from the shadows of its base in the Swiss town of Baar – and launching a potentially record-breaking IPO, says mining analyst Paul Renken.

“The scale of this is going to be about $8.8 billion in the London market and another $2.2 billion size fund raising in Hong Kong. It’s about twenty percent of what they consider to be the size of the corporation, or the business I should say.”

Analysts say Glencore is floating so it can buy more assets. Its long-planned IPO comes as commodities prices hit record highs.

Glencore originally traded metals, minerals and oil, but has become a conglomerate employing tens of thousands, and one of the world’s largest oil suppliers.

The firm connects the dots of the global economy – mining, producing and shipping raw materials across the world to carmakers, oil companies, utilities, steelmakers and food giants.

Until now, Glencore’s chief executive and top managers have remained out of the public eye.

The listing will change all that, making the executives paper multi-millionaires and revealing their bumper bonuses, which are thought to far outstrip those received by banking bosses.

One job at the firm is still up for grabs. Glencore hasn’t yet chosen its chairman.

Simon Murray, a UK-born South Pole adventurer, has said he is in the running for the non-executive role.

Chris Hughes from Reuters Breaking Views is surprised they haven’t made the announcement yet.

“You wouldn’t have wanted them to come out with, you know, a weak chairman, just to meet a deadline. But given that this has got so many of their top advisors involved, it’s a big company, a successful company, you would have thought that they would have got this process going earlier.”

In 2010, Glencore boosted its core profit almost 60% to over $6 billion, helped by price rises in metals like copper, zinc and nickel.

Analysts say Glencore’s future shareholders should see a return on their investment.

But they might not get rich, as much of the upside of business could be captured by its employees.

Bottom line: The world’s largest commodities trader, Glencore, prepares to step out of the shadows as it launches a potentially record-breaking IPO.