Trading The Glencore IPO (BAC, BCS, UBS, CS, C, MS)

According to Bloomberg, Glencore International AG, the largest commodities trader, is almost ready to announce the eight investment banks that will be underwriting its Hong Kong IPO, worth some $10 billion. According to sources close to the situation, Bank of America Corp. BAC, Barclays Plc BCS BNP Paribas, Societe Generale SA, and UBS AG UBS may be bookrunners on the IPO, This is in addition to lead managers, who many are speculating to be Citigroup C, Credit Group AG CS, and Morgan Stanley MS. Additional banks, including Liberum Capital Ltd., may be given lesser roles. Since this is an enormous IPO, the fees paid out to the banks will be in the tens of millions for the work, which is a strong source of profits for investment banks. The company is reportedly set to go public as early as April. Banks are generally paid around 2.5% of the size of an IPO, so a $10 billion IPO could result in $250 million in fees paid out to the banks. The size of the Glencore IPO has come under much speculation recently, with some speculating it could be as much as $15 billion. That would give the commodities trader a market value of $80 billion. In addition to its commodity trading business, Glencore has significant holdings in miners, include a 34% stake in Xstrata Plc and an 8.8 percent interest in United Co. Rusal, the largest aluminum producer.