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BlackRock expects Glencore IPO in 2nd quarter

Published 03/29/2011, 01:13 PM
Updated 03/29/2011, 01:16 PM
FTNMX551030
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* BlackRock holding Glencore investment at book cost

* IPO could result in material change in Mining Trust value

* Events, like Japan, could get in the way of an IPO

By Sue Thomas

LONDON, March 29 (Reuters) - Asset manager BlackRock Inc expects Glencore to go ahead with an IPO in the second quarter of this year, boosting the value of Blackrock's investment in the commodities trading giant.

Blackrock, the world's largest asset manager, was one of a handful of investors in Glencore's $2.2 billion convertible bond in 2009, which will turn into shares upon an initial public offering.

The convertible bond valued Glencore at $35 billion, but one analyst said the secretive Swiss-based group was now worth about $60 billion.

"So it's likely that we'll see a change in valuation in that instrument as it moves towards the IPO, which is being planned for in the second quarter of this year," Evy Hambro, who manages Blackrock's $17-billion World Mining Trust, said on Tuesday.

"This could be quite a material change in terms of the overall value of the fund, with such a large investment held at such a low valuation," he told an Association of Investment Companies roundtable in London.

When asked for a more specific date, Hambro said: "The media is speculating it will be some time in the second quarter, given that the second quarter is only a couple of days away, we're talking about that time frame."

"It's not changed," Catherine Raw, a director and portfolio manager for BlackRock, added.

Glencore is set to appear before the listing committee of the Hong Kong stock exchange this week, the strongest sign yet it will go ahead with a roughly $10 billion initial public offering, sources with direct knowledge of the plans told Reuters.

Hambro said about 11 percent of the Mining Trust's portfolio is invested in debt instruments and the Glencore convertible bond makes up the largest single position at about 5 percent.

"We're holding that investment as at the end of last month at par position, so at book cost. Yet the IPO range talked about is substantially higher than that in terms of its valuation."

A Reuters survey of 10 fund managers from investment houses controlling total global assets of $3 trillion found a majority assuming the deal will proceed before a summer listings hiatus, despite the near panic on markets caused by the Japan disaster.

"Events can come like Japan, and so that can come in the way of an IPO, what are the equity markets going to do in the next few months?" Hambro said.

"We're hopeful that the company does get to it at a market valuation that will allow us to materially change the price at which we hold the investment at." (Editing by Jon Loades-Carter)

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