Glencore close to hiring eight banks for IPO - source

LONDON Tue Mar 22, 2011 5:26pm GMT

Logos are seen in front of Swiss commodities trader Glencore building in Baar near Zurich January 5, 2010. REUTERS/Christian Hartmann

Logos are seen in front of Swiss commodities trader Glencore building in Baar near Zurich January 5, 2010.

Credit: Reuters/Christian Hartmann

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LONDON (Reuters) - Glencore GLEN.UL, the Swiss commodity trading giant, is close to hiring eight banks to supervise its planned multi-billion-dollar London and Hong Kong listing, a person familiar with the matter said.

Glencore, valued earlier this year by one analyst at about $60 billion (36.6 billion pounds), is continuing to prepare for what could be a record London initial public offering (IPO), despite market turmoil scuppering several other flotations.

If Glencore decides to proceed with an offering, it is likely to hire Bank of America Merrill Lynch (BAC.N), Barclays Capital (BARC.L), BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA) and UBS (UBSN.VX) to manage the listing, alongside its existing trio of financial advisers, the person said.

Citi (C.N), Morgan Stanley (MS.N) and Credit Suisse (CSGN.VX) are likely to serve as joint global co-ordinators, the most senior role on an initial public offering (IPO), with the other five banks probably acting as joint bookrunners.

On Monday two people familiar with the matter said Glencore's top management, led by chief executive Ivan Glasenberg, was starting several days of meetings with big U.S. fund managers who could support its flotation.

Glencore wants to swap a partnership structure for a public listing. That would help it pursue bigger deals -- including a possible merger with Xstrata XTA.L, the Swiss miner it already part-owns.

The list does not include either of Xstrata Plc's longstanding advisers and corporate brokers, Deutsche Bank and JPMorgan, or Goldman Sachs.

The lineup partly reflects the banks with the biggest lending ties to Glencore.

All eight likely advisers were among the 20 bookrunners for Glencore's $10.26 billion loan arranged in May 2010, Thomson Reuters Loan Pricing Corp data show.

The deal was last year's sixth-largest European syndicated loan, and the biggest to an unlisted borrower.

Glencore's other big lenders include HSBC (HSBA.L), ING (ING.AS) and Royal Bank of Scotland ABNNV.UL, the LPC data show.

While no final decision has been taken on an IPO, let alone its precise size, the potential fee income for banks runs into the hundreds of millions of dollars.

Freeman & Co estimates banks' fees could total as much as $300 to $400 million, if Glencore sold $10 billion of shares, split 3-1 between London and Hong Kong.

Glencore declined to comment.

(Reporting by Quentin Webb and Kylie MacLellan; Editing by Alexander Smith)

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