HONG KONG Commodities trader Glencore will close the books for its planned $11 billion initial public offering a day ahead of schedule, underscoring strong investor demand for its shares despite volatile commodity markets.
According to details in a term sheet seen by Thomson Reuters IFR and confirmed by sources close to the deal, subscriptions to the IPO will now close on May 17, though pricing will still go ahead as planned on May 19, the day conditional trading begins.
No reason for the early close was provided in the term sheet, but one of the sources told Reuters on Friday the offer was already "multiple times covered" across the price range.
Typically, an early close is a positive sign. It will also give underwriters more time for the orderly allocation of shares to investors across the globe.
"Books will close one day earlier than previously announced. The only exceptions to be made are for investors with meetings thereafter," the term sheet said.
Glencore declined to comment on the change to the listing, which is set to boost its firepower for deals but will also push the group into the public eye after 37 years and make its publicity shy executives paper multi-millionaires.
Order books for shares in Glencore, the world's largest diversified commodities trader, were fully covered within hours of the start of the sale process last week, 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.
Chief Executive Ivan Glasenberg told reporters in Hong Kong on Thursday that the IPO had generated strong demand, dismissing agitation in commodity markets as "froth."
"This is a good sign," Alex Wong, a director with Ample Finance Group said of the change to closing dates. "But the retail demand for the offer is unlikely to be strong because of the recent slump in commodity prices."
The retail portion of the IPO will be a maximum of 10 percent and is likely to be well below that.
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.
"The Glencore listing is about a lot more than tomorrow's commodity price and today's movement in the share market. You would have to see something substantially more disturbing go through the market than what we have seen (for there to be a change in price or a decision to pull the offer)," said Damien Hackett, head of research at Canaccord Genuity in London.
"It would be quite disturbing if they were playing that short a game, and I doubt that they are."
The Hong Kong offer 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.
No other terms of Glencore's offer were changed, the sheet showed. Glencore launched the much-anticipated global IPO, with a dual listing in London and Hong Kong, last week and set a price range of 480-580 pence per share..
The mid-point of that range gives the company a value of 36.5 million pounds ($59 million).
Citigroup, Credit Suisse and Morgan Stanley are the joint global coordinators for the offer, joined by another 20 banks in lower ranking syndicate roles.
(Additional reporting by Elzio Barreto in Hong Kong and Clara Ferreira-Marques in London; Editing by Chris Lewis, Anshuman Daga and Alexander Smith)