With Yandex (NASDAQ:YNDX) debuting at its IPO on the NASDAQ this morning, and investors still cruising in the wake of LinkedIn’s (NYSE:LNKD) smashing success last week, few may have been paying attention to Glencore. The largest mining and commodities (NYSE:RJI) trader on the market made its debut on the London Stock Exchange in its IPO this morning. The Swiss-based company failed to hit the gold struck by LinkeIn (NYSE:LNKD) last week, as so far shares in the company have dropped by 14 cents in early trading, falling from $8.60 at IPO to $8.46 in recent exchanges.
Among the most highly anticipated IPOs of the year, Glencore’s stumble out of the gates raises questions for investors and analysts. The international commodities (NYSE:RJI) and raw materials (NYSE:XLB) supplier sold 14 billion shares last week, raising $10 billion dollars in capital and placing the firm with a market cap of a cool $60 billion dollars, making it the biggest IPO of the year. Glencore’s IPO is the largest initial share ever sold in London, and the most substantial offering worldwide since General Motors (NYSE:GM) sold its first stock in November.
With such a massive market cap, and the firm’s elite status in the highly coveted commodities (NYSE:RJI) and raw materials (NYSE:XLB) sector, why has the Glencore IPO been something of a flop? Answers may be related to the company’s controversial past. Glencore founder and former partner Mark Rich has a history of shady dealings in the past, and the firm itself has been investigated by journalists and international NGOs for its relationships with unscrupulous regimes, notably investments it made in Columbia, Bolivia, Ecuador, and Zambia in recent years. The firm has also been accused of dealing with rogue states, and was named by the CIA as a culprit in receiving illegal kickbacks in the infamous “oil for food” (NYSE:USO) (NYSE:RJA) scandal in Iraq.
With such a secretive and checkered past, investors may be on the mark in their reluctance to take part in the Glencore IPO.