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Posts Tagged ‘Glencore’

Our SWFs owned four out the10 biggest investment flops of the last 10 yrs

In Financial competency, GIC, Temasek on 26/02/2012 at 6:35 am

(Or “GIC may have bot another dog”

They owned significant stakes of the four (BoA, Citigroup, UBS and Barclays) of the 10 biggest dogs that had fleas on their fleas between 2002 and 2012. To be fair, the big stakes were bought in late 2007 or early 2008. GIC and Temasek each has two dogs to their shame. GIC still owns stakes in UBS and Citigroup. Temasek cut its losses at the nadir of the financial crisis of 2007-2009, in early 2009, allowing hedgies and Arabs to make money on BoA and Barclays.

http://www.economist.com/blogs/graphicdetail/2012/02/daily-chart-8

(Remember how the constructive, nation-building local media were trumpeting the purchases as indication that our SWFs were “the greatest”. Well they were “the greatest”: the greatest mugs. Funny our media never told us that.)

Hope GIC’s big stakes in Glencore and Bunge (both commodities traders, the former in metals, the latter in agricultural products) don’t go the way of UBS and Citigroup (big banks).

GIC now has over 5% of Bunge.

Via shares and convertible bonds that convert into Glencore shares, it also has a significant stake in Glencore. GIC has been doing some financial engineering to reduce its cost of Glencore shares, which I assume it bot at the IPO. The price has fallen 18% since then. As to its convertible bonds, it is getting a good interest rate of 5% but the equity value of the bond is 17% down, I calculated.

GIC recently raised its stake in Xstrata by 20%  and trimmed its holding in Glencore International after the companies said they planned to combine. GIC has increased its Xstrata stake to 29.05 million shares from 24.1 million shares since Feb 8, the day after Glencore offered to acquire the shares in Xstrata it doesn’t already own for US$37.6 billion, data compiled by Bloomberg show. GIC cut its Glencore stake by 21% t to 33.2 million shares.

Glencore lists, commodities’ mkts collapse

In Commodities on 06/05/2011 at 4:35 pm

As trading and mining house Glencore is listing, making some mgrs billionaires, commodity prices have fallen for a second day in early trading in Europe, led by another drop in crude oil.

This comes after markets were hit by one of the biggest sell-offs in two years on Thursday. Brent crude fell 4.3% to below $106 a barrel, adding to a 8.6% drop on Thursday, and bringing its cumulative fall over the past week to over 16%.

Industrial metals such as copper also saw further falls, as did some foodstuffs.

If this goes on, the view blogged here earlier that the Glencore IPO is a sign that commodities mkts have peaked for the time being, was a gd call.

GIC has a winner with Glencore

In GIC on 15/04/2011 at 7:03 am

In Dec 2009, GIC and a few other investors (including BlackRock, Fidelity and a Rothschild) invested US$2.3bn in the convertible bonds of a then private Glencore. The convertibles put a value of US$35bn on Glencore, a trading co with a 34.5% in mining co ,Xstrata

Analysts now put the value of soon to be listed Glencore at between US$55-70bn.

If Glencore lists at the expected US$60bn, then the US42.3bn issue of convertible bonds will be worth US$4.3bn in Glencore shares.

Nice work GIC.

Glencore IPO: Commodities to collapse?

In Commodities on 06/04/2011 at 6:36 am

You might not have heard of Glencore. There is little news of its upcoming IPO in our MSM because the US$10bn IPO will be listed in London and HK. This would value the company at US$145bn

Co is a trader in commodities.

With oil at USD120 and demand for most commodities strong, why should this float mark the end of an uptrend in commodities? Well the US Fed is likely to stop printing money and the European Central Bank is likely to join emerging market central banks in raising interest rates. China has juz raised interest rates for the second time in four months.

Remember Blackstone? In 2007, Blackstone, a private equity firm went public at US$36. A year later, the stock was at US$5. The private equity boom had ended. It is now only recovering.

Shrewd money knows when to cash out and Glencore has some of shrewdest minds in the commodities market.

When a controlling stake goes at a massive discount

In Energy, Investments on 16/12/2009 at 9:10 am

Glencore International, the world’s biggest commodity trader, has bought a 51% stake in  Chemoil Energy for US$233 million ($325 million) from the Chandran Family Trust.

It paid 35.52 US cents a share: 21.1% discount to the  closing price of 45 US cents, on Friday.

In late May this year, just before rumours of Glencore buying a stake appeared, Chemoil was trading at around the 30 US cents level. The rumours pushed it to as high as 56.5 US cents.

Moral of the story: buyer of a controlling block may not need to pay a premium to market. It all depends on its bargaining power vis-a-vis the seller. And whether there is another major shareholder willing to deal:  Itochu Corporation, a Japanese conglomerate, with a 37.5%  stake in Chemoil, was apparently contented with its stake.

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