Snaring Glencore’s listing is clearly a big coup for Hong Kong, which is still the IPO capital of the world four years after it took the coveted title from New York. Just last year, companies raised more than US$50 billion in IPOs on the Hong Kong bourse. Glencore had initially considered New York and Singapore as venues. In the end, nothing succeeds like success. It’s only natural that companies looking to do really large IPOs should flock to a bourse that is far and away the leader in new listings. While Hong Kong has in recent years attracted several large raw material firms such as Russia’s aluminium giant United Co Rusal and, more recently, Brazilian iron ore behe moth Vale SA, alongside Chinese raw materials giants and large coal players from Mongolia, Glencore’s real peers — commodities supply chain managers Noble Group and Olam International — are listed in Singapore. Companies prefer to list in exchanges where other peers trade or there is critical mass of similar listings.

 

In a sense, Glencore is peerless. In a report last July, London-based boutique investment bank Liberum Capital estimated that pre-IPO Glencore was worth up to US$51 billion. Add some cash to its balance sheet, pay down some of its debts, give it a decent-size free float in Hong Kong and London, mix it all up with higher commodity prices as well as more robust global demand for raw materials and you are talking a much better valuation. Dealogic estimates the IPO would value the firm at more than US$60 billion — compared with BHP-Billiton’s US$241 billion and Rio Tinto Group’s US$144 billion.