Glencore has planned a $10-billion float on the Hong Kong stock exchange.MIKE CLARKE
Commodities giant Glencore met with Hong Kong stock exchange officials on Thursday to request approval for its planned $10-billion (U.S.) float, according to sources with direct knowledge of the plans.
Hong Kong Stock Exchanges and Clearing Ltd. heard the application from the world's largest commodities trader at a scheduled meeting of its listing committee, said the sources, who declined to be named.
Glencore set an April 1 deadline for the sell-side analysts it had briefed to complete their research notes. So anticipation is mounting that the firm is close to a so-called intention-to-float announcement in London.
But the firm is expected to wait until after it receives a formal response from the Hong Kong exchange, which usually takes two to three days, before pressing ahead with the main London tranche of the listing.
"They are different [processes]but you need to do it at the same time," said a source familiar with the matter.
"You would have to wait, definitely."
Hong Kong exchange officials could not be reached for comment, while Glencore declined to comment.
Glencore, valued earlier this year by one analyst at about $60-billion, is looking to ditch its long-standing partnership structure in favour of life as a public company, which will make it easier to reward partners and make acquisitions.
The company has been keeping its listing plans under wraps since briefing analysts at the start of this month, but is expected to list shares in both Hong Kong and London in what could be Britain's biggest ever initial public offering.
A listing in Hong Kong would help Glencore tap deep-pocketed Asian investors, including sovereign wealth funds in China, South Korea and Singapore, as well as raising its profile among potential clients in the region.
Earlier this month, a source with direct knowledge of the offering said Glencore was confident both the exchange and the city's watchdog will back the deal, having eased rules on mining companies and steadily increased the amount of foreign companies it reviews for IPOs.
The company has met with investors in the past few weeks to gauge interest in an offering, with several of its key trading partners in Asia showing interest in buying the stock.
Volatility in global stock markets earlier this month on fears of a Japanese nuclear crisis and rising unrest in North Africa and the Middle East derailed several listings and raised questions over whether Glencore was delaying its own plans.
As markets rebounded many firms have pressed ahead with planned floats, although Oman's Renaissance Services pulled the plug on a $500-million London float of its oil field services unit Topaz on Thursday.
With a glut of firms competing for investor attention and the risk of uncertainty remaining, investors can afford to be discerning, bankers said, but the right firm with a good story at the right price would still attract demand, especially larger share sales which offer investors good liquidity.
"I don't think Topaz changes the dynamics of the IPO market," one banker said.
If Glencore were to follow the usual month-long European listing timetable, it would need to launch its offering by around mid-April in order to complete it before mid-May.
Otherwise it could face having to delay its plans to refresh its accounts in order to comply with U.S. accounting rules.