| HONG KONG
HONG KONG Glencore International AG CEO Ivan Glasenberg said recent falls in commodity prices were due to "froth" in the market and had not affected strong demand for the company's IPO, worth up to $11 billion.
The world's largest diversified commodities trader last week unveiled the much-anticipated prospectus for the initial public offering, detailing plans to raise funds in a dual listing in Hong Kong and London. The two-part, 3 inch thick prospectus totals 1,908 pages.
Commodity price volatility since last week has prompted market worries over Glencore's planned IPO, set to be London's largest ever, with fund managers last week sensing an opportunity to drive down the price.
Glasenberg said the decline in commodity prices was "due to some froth" in the market and had not affected demand for the IPO.
"We've had strong demand, I don't think we can say much more than that," Glasenberg told reporters in Hong Kong via video-conference from London.
"We haven't seen much pullback with the recent drop in commodity prices," said Glasenberg, whose stake could be worth $10 billion after the listing later this month.
The rout in commodity markets has battered UK mining stocks, with the sector down more than 3 percent on Thursday's fresh worries.
Glencore's listed holdings, worth around 32 billion pounds when the IPO process began, have seen their total value slip to 30.7 billion. Xstrata XTA.L alone, in which Glencore owns a 34.5 percent stake, has seen its shares fall more than 10 percent since the start of the month.
GRAINS, REFINERIES EYED
Glencore has already lined up buyers for all the shares in its planned float, but part of that success is due to the relatively small stake in the company being placed with funds and to Glencore's size, which makes it a must-buy for many.
The company is ditching its long-standing partnership structure in favor of a public listing which would make it easier to reward partners and conduct acquisitions.
Glasenberg said areas they were focusing on included grains and oil refineries.
"We are weak on the grains side in the United States. We do believe we do need to build infrastructure or acquire infrastructure in the United States in the grains side," he said.
"On the oil side, we haven't had the financial power before to look at oil refineries because oil refineries are a bit more costly (to acquire). Those are the areas you will see future growth."
Glencore set a price range of HK$61.24 to HK$79.18 for the Hong Kong portion of the IPO, setting aside at least 31.25 million shares for sale to retail investors in the Asian financial hub.
The Hong Kong offer, set to start on Friday, aims to capitalize on the deep pockets of investors in the region, who are well acquainted with surging demand for metals and other natural resources from fast-growing economies in China and India.
"We still see strong demand in Asia. We continue to see mining companies struggling to produce and increase their production to meet this demand," Glasenberg said. "A lot of what has happened in the past week is the froth."
Glencore had previously set a 480-to-580 pence per share price range for the London portion of the offering. That values it at 36.5 billion pounds ($60 billion) at the mid-point, which is below the price some analysts say the company is worth and was seen as an attempt to leave room for the stock to rise after the IPO.
"It is going exactly according to plan so it just a matter of coming up with a price that works for everybody," a source close to the deal said.
A final price will be set just ahead of its May 19 listing.
Glencore lined up buyers for all of the shares in the offering a day after it opened the books on the IPO to potential investors, two sources close to the deal told Reuters.
(Additional reporting by Kylie MacLellan and Clara Ferreira Marques in LONDON; Editing by Lincoln Feast)