Glencore took a step closer to fulfilling its dream of bidding for mining giant Xstrata today when bankers and brokers reported huge demand for the shares to be floated just one day after the firm unveiled its prospectus.
That surging demand is likely to push the starting price when the commodities giant joins the stockmarket on May 24 or 25 to the top end of the range, boosting the acquisition currency it seeks in order to expand its already massive empire.
Glencore owns 35% of Xstrata already and has been open about wanting the rest.
The 1600-page prospects sent to the City yesterday put a price on the shares of between 480p-580p.
The higher the price, the more firepower Glencore will have for deals.
Investors were said to be quick off the mark this morning, asking their brokers to grab as much stock as possible. One insider said the float is already fully covered just hours after the announcement - unusual for such a huge float.
Xstrata shares fell this morning on a sell note from UBS that may aid Glencore's ambitions.
A pricing at the top of the range will also increase the paper fortunes of the partners, including chief executive Ivan Glasenberg, who has a 15% stake.
There is some concern that the key traders and managers will lack an incentive to keep working as hard as they have done.
One hedge fund manager said of the float: "It should go well, but my concern would be whether the newly enriched top 150 managers are going to still be focused on the business. Reminds me of what happened to Wed Durlacher when they merged with BZW. All the boys were permanently on the piss."
There's also a feeling that the commodities boom may be over, something that would hurt Glencore profits.
Manoj Ladwa at ETX Capital said: "I'm bearish. If commodities are to continue higher, why are they floating the company? They are effectively reducing their commodity exposure/going short commodities by floating."
The prospectus warns that a crash in commodity prices could result in customers "being unwilling or unable to honour" commitments to buy goods from the company, something that happened in 2008 and 2009 during the global financial crisis.
The prospectus also reveals the extent of Glencore's reliance on it trading arm. It notes that 44% of the profits come from "marketing activities" as opposed to the buying and selling of physical assets such as metals and mines.
That surging demand is likely to push the starting price when the commodities giant joins the stockmarket on May 24 or 25 to the top end of the range, boosting the acquisition currency it seeks in order to expand its already massive empire.
Glencore owns 35% of Xstrata already and has been open about wanting the rest.
The 1600-page prospects sent to the City yesterday put a price on the shares of between 480p-580p.
The higher the price, the more firepower Glencore will have for deals.
Investors were said to be quick off the mark this morning, asking their brokers to grab as much stock as possible. One insider said the float is already fully covered just hours after the announcement - unusual for such a huge float.
Xstrata shares fell this morning on a sell note from UBS that may aid Glencore's ambitions.
A pricing at the top of the range will also increase the paper fortunes of the partners, including chief executive Ivan Glasenberg, who has a 15% stake.
There is some concern that the key traders and managers will lack an incentive to keep working as hard as they have done.
One hedge fund manager said of the float: "It should go well, but my concern would be whether the newly enriched top 150 managers are going to still be focused on the business. Reminds me of what happened to Wed Durlacher when they merged with BZW. All the boys were permanently on the piss."
There's also a feeling that the commodities boom may be over, something that would hurt Glencore profits.
Manoj Ladwa at ETX Capital said: "I'm bearish. If commodities are to continue higher, why are they floating the company? They are effectively reducing their commodity exposure/going short commodities by floating."
The prospectus warns that a crash in commodity prices could result in customers "being unwilling or unable to honour" commitments to buy goods from the company, something that happened in 2008 and 2009 during the global financial crisis.
