Glencore Prospectus Confirms IPO Will Create Six New Billionaires
Glencore Prospectus Confirms IPO Will Create Six New Billionaires
By CHRISTOPHER HELMAN
The 1,600-page Glencore prospectus has finally been released (though it wasn’t easy to track down). The figures confirm what was rumored this morning–that some colossal wealth is being unleashed in this IPO.
After the float the company will be valued at roughly $60 billion, from whence we derive these seven new mega-fortunes.
1. CEO Ivan Glasenberg will have 1.09 billion shares, or 15.8% of the company, for a net worth of $9.5 billion. Glasenberg would tie for 93rd wealthiest person on Forbes list of Global Billionaires, alongside Russia’s fertilizer king Dimitry Rybolovlev and just after another Russian, German Khan. Glasenberg’s salary this year is 925,000 pounds sterling.
2. Daniel Francisco Mate Badenes: $3.6 billion (416.4 million shares, or 6%).
3. Aristotelis Mistakidis: $3.6 billion (411.8 million shares, or 6%).
4. Tor Peterson: $3.2 billion (366.3 million shares, or 5.3%).
5. Alex Beard: $2.76 billion (320.5 million shares, or 4.6%).
6. Steven Kalmin: $600 million (70.7 million shares, or 1%).
7. And then there’s the mysterious “selling shareholder” who is parting with 238.8 million shares in the IPO (or 4%), worth $2.4 billion. My suspicion is that this is former CEO and departing Chairman Willy Strotthote.
Ivan Glasenberg, aged 54 (Chief Executive Officer)
Ivan Glasenberg joined Glencore in April 1984 and has been Chief Executive Officer of Glencore since January 2002. Mr Glasenberg was appointed to the Board on 14 March 2011. Mr Glasenberg first worked in the coal/coke commodity department in South Africa for three years as a marketer, responsible for sourcing coal in South Africa and then in Australia for two years as head of the coal/coke commodity division, Asia, responsible for sourcing and marketing coal in regions including Australia, Asia and South Africa. Between 1988 and 1989, he was based in Hong Kong as manager and head of Glencore’s Hong Kong and Beijing offices, as well as head of coal marketing in Asia, where his responsibilities included overseeing the Asian coal marketing business of Glencore and managing the administrative functions of the Hong Kong and Beijing offices. In January 1990, he became director of the coal/coke commodity department, responsible for the worldwide coal business of Glencore for both marketing and industrial assets, and remained in this role until he became Chief Executive Officer in January 2002. Mr Glasenberg is a Chartered Accountant of South Africa and holds a Bachelor of Accountancy from the University of Witwatersrand. Mr Glasenberg also graduated in 1983 from the University of Southern California with an M.B.A. degree. He is currently a director of Minara as well as Xstrata and UC Rusal. Before joining Glencore, he worked for five years at Levitt Kirson Chartered Accountants in South Africa.
The company, in its initial filing (a complete prospectus is scheduled to be released May 4), says much of the cash raised will go to boosting its stake in Kazakhstan miner Kazzinc from 51% to 93%. As Glasenberg told the Financial Times in April, “We took the nice easy stuff first from Australia, we took it from the U.S., we went to South America … Now we have to go to the more remote places.”
But Glencore’s biggest public stake is in a mining company called Xstrata; its 34% is worth $24 billion. Glencore helped create Xstrata–selling it the coal mines that undergirded its 2002 IPO, and marketing much of its output ever since. Glasenberg has made no secret of his desire to acquire the rest of the company. Glencore’s recently departed chairman (and former ceo) Willy Strothotte remains chairman of Xstrata. With newly minted shares to use as currency in an acquisition, combining the firms is only a matter of time.
What else is coming? We can take some clues from the men who Glasenberg has newly selected to his board of directors. There’s new independent director Tony Hayward, former chief of BP, who will help advise on oil deals, especially those involving Glencore’s relationship with Russia’s Russneft. And newly appointed Chairman Simon Murray at first appeared to be a smart choice. Murray has spent the last 40 years in Hong Kong, as director of Hutchison Whampoa and most recently as founder and chairman of General Enterprise Management Services. He understands the Chinese, who are arguably Glencore’s most important customers. But Murray in late April enraged many with sexist comments, saying in a newpaper interview that women are “not so ambitious in business as men because they’ve better things to do. Quite often they like bringing up their children and all sorts of other things.” Not a good start, but Murray apologized and the gaffe might even help change Glencore’s macho culture.
As for whether or not you should buy shares in the new Glencore? Probably not. These guys are opportunistic traders: they can’t help but do everything in their power to buy low and sell high. With that in mind, better to get ahead of Glasenberg, and put some money into Xstrata.
The driven band of top traders who make it through a rigorous selection process are cut from the same mold, according to several sources who declined to be identified.
“They are so tough, the ones who survive. They are so resilient, like androids. There can be all kinds of horrible things going on, and they rarely lose their cool,” said one industry source who has friends at the group.
The person said that staff carried laptops and Blackberries while on holiday, logging on to answer 400-500 emails and being on call 24/7.
An outsider who has worked closely with senior Glencore officials said the group’s hard-working, “up-or-out culture” can be ruthless and even cult-like.
“There is an element of the Moonies about Glencore,” the person added, referring to the term used by critics to describe followers of the Unification Church.
“To say they’ve all drunk from the same Kool-Aid is an understatement,” said another outsider who has worked closely with top company officials.
Glencore says it does not hire senior staff from outside, but promotes insiders to maintain a “very strong corporate culture.”
Many top traders live almost permanently out of suitcases as they move between the group’s more than 50 offices in 40 countries, foremost among them in Switzerland, the U.S. East Coast, London, Rotterdam, Beijing, Moscow and Singapore.
A person who has experience working with Glencore said: “I generally worked 10-12 hours a day. The assumption is glam parties in the evenings … but the reality of the daily stresses means I rarely went out in the week.”
Those stresses are in part explained by a culture in which blunders are not tolerated.
“If you make a mistake and you’ve lost them money, then the whole company will ridicule you because they send these multi-chain emails around,” the first source said.
“They learn to be really, really careful, because the whole company will laugh at you and you’ll lose your bonus.”
But while the stresses can be severe, there is also a tight bond among the traders that is cultivated by CEO Ivan Glasenberg, who worked his way up over a quarter century from starting as a coal trader in South Africa.
“He’s a very charismatic guy. I don’t think I can recall anybody that hasn’t been very taken with him when they meet him. He’s very driven, but very approachable and down-to-earth,” the second outsider said.
While Glasenberg can have a fiery temper when things go wrong, he also inspires strong loyalty from his traders, who are hired young and expected to make a career at the company.
A group of traders often joins the 54-year-old boss for his daily run.
That kind of bond limits the prospect of a brain drain from the group when it lists in London and Hong Kong next month.
“A lot of them are very loyal to Ivan personally. They’ll want to be part of the new structure. They are his loyal lieutenants,” the first source said.
“They don’t need the money; they know they’ll be worth far more than they can spend in a lifetime. What they want is the buzz of being part of this venture.”