Glencore is set to price its initial public offering at a level that will give the commodities trading house a valuation in the mid-$50bn range, below an average forecast valuation of $62bn, according to people familiar with the deal.
The lower-than-expected pricing comes in spite of strong demand from blue-chip investors, who are set to take about a third of the $11bn IPO as cornerstone shareholders. The move is designed to secure a strong share rally for the company following its flotation.
“Ivan Glasenberg [Glencore chief executive] is determined to price a deal that has a great after-IPO performance,” said a person familiar with the IPO process. An institutional investor who follows Glencore closely and plans to buy a large stake in the flotation added: “There is huge demand [from institutional investors], but Glencore is ready to leave money on the table to secure a great deal.”