Be careful what you wish for
Glencore, a Swiss commodities trading firm, is poised to announce an IPO according to an feature story by Reuters. The IPO could yield $16 billion, valuing the little-known firm at $60 billion. By comparison, Goldman Sachs raised $3.6 billion in its IPO in 1999, giving it a $33 billion valuation at the time.
But the potential comparisons with Goldman might not end with dollars and cents. While Glencore, no doubt, wants permanent capital from a public listing, but is it ready for the public expectations that comewith going public? Goldman, a private partnership like Glencore before its IPO has had a mixed record in dealing with government, media, and public scrutiny. Now, it publishes a Code of Business Ethics, has a report from its Business Standards Committee, and a year ago hired a communications strategy firm with roots in the Bush administration. These are things that companies are forced to do to manage expectations of diverse stakeholders, not things an investment bank with a culture of privacy elect to do.
Glencore should look to Goldman as a cautionary tale. And it might have even more to want to keep away from prying eyes. As a buyer, transporter, warehouser, and seller of physical commodities, Glencore operates in some of the world’s most risky and controversial areas: Congo, Sierra Leone, Zibabwe, Kazakhstan, Zambia, Colombia, and the list goes on.
Then there’s the money. Gelncore’s traders are paid extremely well, even by Wall Street standards. Known for its trading prowess and keen market intelligence the firm has a reputation for shrewd dealings. A source in the Reuters story said, “We all know Glencore never leaves any crumbs on the table.” To boot, the company was founded by Marc Rich, who lived as a fugitive for 17 years until he was pardoned by President Clinton. The combination must be irresistible to enterprising journalists and environmental and human rights activists.
So, is Glencore ready? What do you think? Here’s what the firm told Reuters in response to inquiries for the story linked above: “Glencore is a private company and our communications policy with the media reflects this status.”