Glencore shares started trading on the Australian stock market on Wednesday in a boost to the ASX’s standing as a global hub for mining stocks. The Swiss-based commodity giant, which has a market capitalisation of £69bn, is already listed in London and Johannesburg but has opted to issue stock in Sydney to tap into a mining-savvy investor base. Glencore has issued Chess Depositary Interests, a secondary listing instrument, and over time is expected to join the top tier of Sydney-listed miners alongside BHP, Rio Tinto, Fortescue and Newmont, the US gold miner, as more liquidity builds in its Australian-listed shares.
Chief executive Gary Nagle has said that Glencore expected strong demand from Australian investors for its stock, having met multiple shareholders keen to invest in the mining company in recent days in Australia. “You want to go to markets where mining is appreciated and mining is understood,” he said, describing Australians as “smart investors”. The stock quickly rose to A$11.38 from the A$11.20 debut price before easing to A$11.22 by midday in Sydney. The shares in Glencore’s primary listing in London have gained more than 43 per cent this year, but JPMorgan analysts said the group traded at a significant discount to peers including Rio and BHP.
Glencore was expected to gain momentum via the Australian listing over the next two to three years and was likely to be added to the ASX 200 index, they added. The float of a major name is a boost for the ASX after data centre operator Firmus abandoned its $30bn IPO last week following poor investor demand. The listing would have been Australia’s second-largest on record. The ASX said Glencore was joining 850 mining and resource companies already listed on its exchange. “ASX is a world leader in metals and mining listings over the past decade,” said Anthony Attia, who joined as its chief executive this month. “Our goal, especially in a world where capital is global, is to champion these opportunities and highlight the depth of this market.”
Glencore employs 16,000 people in Australia with coal, zinc, copper and nickel assets that include mines and smelters. The stock will offer Australian investors exposure to a copper player that is not tied to iron ore, as is the case with the country’s largest miners. Glencore also operates a large commodities trading division, which Nagle described as “a differentiator for us versus our peers”. Glencore spoke to Rio Tinto, the Anglo-Australian mining company, about a mega-merger but scrapped talks in February. The company has expressed interest in consolidation opportunities, but Nagle said the ASX listing was not a precursor to any new deals: “We have no shopping list.”
Source: Financial Times Companies · Summarized by HeadlinesBriefing