Global Commodities Trading Firm Glencore Determines $11 Billion IPO

Swiss commodities trading firm Glencore International announced it will be raising an $11 billion IPO, or a 20% stake of its company to public investors.  Its investment bankers include Bank of America (NYSE:BAC), Barclays Plc (NYSE:BCS), BNP Paribas SA, Societe Generale SA, UBS AG (NYSE:UBS), Citigroup (NYSE:C), Credit Suisse Group AG (NYSE:CS), and Morgan Stanley (NYSE:MS).

Reuters has a long article about the planned IPO of Glencore International, a Swiss commodities trading and brokerage firm. They describe the company:

In the world of physical trading–buying, transporting and selling the basic stuff the world needs–Glencore is omnipresent and controversial, just as Goldman is in banking. Bigger than Nestle, Novartis and UBS in terms of revenues, Glencore’s network of 2,000 traders, lawyers, accountants and other staff in 40 countries gives it real-time market and political intelligence on everything from oil markets in Central Asia to what sugar’s doing in southeast Asia. Young, arrogant and often brilliant, its staff dominate their market. The firm’s top executives have forged alliances with Russian oligarchs and well-connected African mining magnates. Like Goldman, Glencore uses its considerable heft to extract the best possible terms in every deal that it does.

US investors and geopolitical strategists should be interested in this company because some of its large customers include BP (NYSE:BP), Total (NYSE:TOT), Exxon Mobil (NYSE:XOM), ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX), Vale (NYSE:VALE), Rio Tinto (NYSE:RIO), ArcelorMittal (NYSE:MT) and Sony (NYSE:SNE), as well as the national oil companies of Iran, Mexico, Brazil and public utilities in Spain, France, China, Taiwan and other countries.

Financial highlights for the company for 2010 include (all units are in USD except where noted otherwise):

  • Revenues of $70,007 billion USD
  • EBITDA of $2,630 billion USD
  • Net income of $1,563 billion USD
  • An increase in EBITDA and net income of 69% and 42% respectively, compared to 2009.
  • Compared to the first half of 2009, profitability from Glencore’s industrial activities increased more than threefold primarily due to increased commodities prices.
  • Liquidity, comprised of cash and short-term credit facilities, or the company’s current assets, stood at $6.5 billion.
  • It completed a refinancing of its revolving credit facilities at a record size of $10.3 billion and issue 7 year 5.25% Eurobonds for EUR 1.25 billion.
  • In March 2010, Glencore exercised its $2.25 billion option to repurchase Prodeco from Xstrata.  It also completed the purchase of a 51.5% stake in Chemoil for $237 million and the rmaining 60% of Vasilkovskoje Gold for $200 million in cash and shares.
  • It advanced oil exploration and development projects in West Africa, commissioned a gold mining operation in Kazakhstan, and other related projects.
  • Net debt increased to $13.6 billion from $10.2 billion, however, debt coverage ratios were unaffected, due to offsetting earnings and increased cash flow from operations.

In short, the company is global in scope and minting money.

Following are some commodities ETFs and ETNs that investors may be interested in:

  • SPDR Gold Trust (NYSE:GLD):  SPDR Gold Trust is an investment fund incorporated in the USA.  The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust’s expenses.  The Trust holds gold and is expected from time to time to issue Baskets in exchange for deposits of gold and to distribute gold in connection with redemption of Baskets.
  • PowerShares DB Oil Fund (NYSE:DBO):  PowerShares DB Oil Fund is an exchange-traded fund incorporated in the USA.  The Fund’s objective is to track the Deutsche Bank Liquid Commodity Index-Optimum Yield Crude Oil Excess Return Index, which is intended to reflect the changes in market value of crude oil.
  • United States Oil Fund (NYSE:USO):  United States Oil Fund LP is an exchange-traded fund incorporated in the USA.  The Fund’s objective is for the units’ net asset value to reflect the performance of the spot price of West Texas Intermedia light.  The Fund invests in futures contracts for West Texas Intermediate light.
  • iShares Silver Trust (NYSE:SLV):  iShares Silver Trust is a trust formed to invest in silver.  The assets of the trust consist primarily of silver held by the custodian on behalf of the trust.  The objective of the trust is for the shares to reflect the price of silver owned by the trust, less the trust’s expenses and liabilities.
  • ELEMENTS Rogers Intl Commodity Index – Total Return ETN (NYSE:RJI):  ELEMENTS Linked to the Rogers International Commodity Index — Total Return is an exchange-traded note issued in the USA by Swedish Credit Corp.  The Notes Will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index.
  • iPath Dow Jones UBS Commodity Index Total Return (NYSE:DJP): iPATH Dow Jones-UBS Commodity Index Total Return ETN is an exchange-traded note issued in the USA. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption, based on the performance of its underlying index, the Dow Jones-UBS Commodity Index Total Return.
  • iShares GSCI Commodity-Indexed (NYSE:GSG): iShares S&P GSCI Commodity-Indexed Trust is an exchange-traded fund incorporated in the USA. The Fund’s objective is that it’s performance will correspond generally to the performance of the S&P GSCI Total Return Index. The Fund invests in a diversified group of commodities.
  • Barlcays Bank PLC iPath Exchange Traded Note (NYSE:GSP): iPath S&P GSCI Total Return Index ETN is an exchange-traded note issued in the USA. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption, based on the performance of the underlying index, the S&P GSCI Total Return Index.
  • PowerShares DB Commodity Index (NYSE:DBC): PowerShares DB Commodity Index Tracking Fund is an investment fund incorporated in the USA. The Fund’s objective is to reflect the performance of the Deutsche Bank Liquid Commodity Index – Optimum Yield Diversified Excess Return Index. The Fund invests in commodities such as Light, Sweet Crude Oil, Heating Oil, Aluminum, Gold, Corn and Wheat.
  • ELEMENTS Linked to the Rogers International Commodity Index–Agriculture Total Return (NYSE:RJA): ELEMENTS Linked to the Rogers International Commodity Index – Agriculture Total Return is an exchange-traded note issued in the USA by Swedish Credit Corp. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index.
  • ELEMENTS Linked to the Rogers International Commodity Index–Metals Total Return (NYSE:RJZ): ELEMENTS Linked to the Rogers International Commodity Index – Metals Total Return is an exchange-traded note issued in the USA by Swedish Credit Corp. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index.
  • ELEMENTS Linked tot eh Rogers International Commodity Index–Energy Total Return (NYSE:RJN): ELEMENTS Linked to the Rogers International Commodity Index – Energy Total Return is an exchange-traded note issued in the USA by Swedish Credit Corp. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index.
  • PowerShares DB Agriculture Fund (NYSE:DBA): PowerShares DB Agriculture Fund is an exchange-traded fund incorporated in the USA. The Fund’s objective is to reflect the performance of the Deutsche Bank Liquid Commodity Index – Optimum Yield Agriculture Excess Return Index.
  • PowerShares DB Base Metals Fund (NYSE:DBB): PowerShares DB Base Metals Fund is an exchange-traded fund incorporated in the USA. The Fund’s objective is to track the Deutsche Bank Liquid Commodity Index-Optimum Yield Industrial Metals Excess Return Index, which is intended to reflect the base metals sector.
  • PowerShares DB Precious Metals (NYSE:DBP): PowerShares DB Precious Metals Fund is an exchange-traded fund incorporated in the USA. The Fund’s objective is to track the Deutsche Bank Liquid Commodity Index-Optimum Yield Precious Metals Excess Return Index, which is intended to reflect the precious metals sector.
  • PowerShares DB Energy Fund (NYSE:DBE): PowerShares DB Energy Fund is an exchange-traded fund incorporated in the USA. The Fund’s objective is to track the Deutsche Bank Liquid Commodity Index-Optimum Yield Energy Excess Return Index, which is intended to reflect the energy sector.
  • iPath DJ-UBS Platinum Subindex (NYSE:PGM): iPath Dow Jones-UBS Platinum Total Return Sub-IndexSM ETN is an exchange-traded note issued in the USA. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index, the Dow Jones-UBS Platinum Total Return Sub-Index.
  • iPath Dow Jones UBS Copper Total Return (NYSE:JJC):  iPath Dow Jones-UBS Copper Total Return Sub-Index ETN is an exchange-traded note incorporated in the USA. The Notes will provide investors with a cash payment at the scheduled maturity or early redemption based on the performance of the underlying index, the Dow Jones-UBS Copper Total Return Sub-Index.
  • United States Natural Gas Fund (NYSE:UNG): United States Natural Gas Fund LP is an exchange-traded fund incorporated in the USA. The Fund’s objective is for the units’ net asset value to reflect the performance of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the futures contract on natural gas traded on the New York Mercantile Exchange.

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