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Meet Glencore, a global commodities trading powerhouse in an age of high food prices. How did it avoid scrutiny for so long?
Boston — If it were listed on the U.S. stock exchange, Glencore would be valued among the top 50, alongside names like Visa, 3M and Home Depot. With $145 billion in 2010 revenues, Glencore would have ranked sixth on the Fortune 500 list, ahead of AT&T, Ford and ConocoPhilips.
But Glencore isn’t a public company. It’s a private business, based in picturesque Baar, Switzerland, a discreet village in the northern lap of the Alps, in a district known for its low taxes. The firm’s 500-odd owners are reputed to be brilliant. They work extraordinarily hard, and are well rewarded for their efforts, earning multi-million dollar bonuses that would make Wall Street traders blush.
More importantly, the company they have built since 1974 is valued at $60 billion. That means the average partner’s stake is worth $120 million.
Glencore is the world’s biggest commodities trader, according to Reuters. There’s a decent chance you’ve recently bought something, perhaps many things, that have crossed its trading desks.
It buys and sells much of the wheat, corn, rice, sugar and edible oils that end up on the world’s dinner tables. Its subsidiaries farm an area of 1,042 square miles, the size of Rhode Island, across Russia, Kazakhstan, Ukraine and Paraguay. It owns numerous mines around the world, and sells aluminum, copper, zinc and lead to major manufacturers. It also trades fuels, such as coal. Although it drills no oil of its own, it “handles the supply” of 3 percent of the world’s daily oil consumption, according to the company’s website.
Despite this critical role in the global supply chain, until recently the company remained secretive, largely eluding public scrutiny. Because it was privately held, it was under no obligation to disclose financial information. Although well known in industrial circles, it conducted its affairs quietly — this was a competitive advantage, considering the countries in which it operates.
Now, in an effort to become an even bigger global player, Glencore is looking to raise as much as $12.1 billion by selling shares to the public. In late May 2011, it will launch an initial public offering of up to 20 percent of its stock, in London and Hong Kong.
Listing on a stock exchange means that, for the first time, Glencore’s global operations are being scrutinized by investors, regulators and journalists. Its finances are being reported publicly. And its executives are conducting interviews with the European media. (To comply with U.S. securities restrictions on overseas listings, for the moment it is not speaking with U.S.-based media; as such, it declined an interview request from GlobalPost).
So far, the coming out party has been intriguing, gaffe-prone, and eye-opening. It’s been the kind of unveiling that raises questions about how a company of this sort could hold sway over the most essential products in global commerce.
Given that Glencore’s stock sale stands to be among London’s biggest ever, the European press has covered it aggressively. Articles on Glencore’s colorful corporate culture have verged on breathless. For example, a Reuters feature on the firm’s legendary commodities traders gushed, “They’re a special breed, likened to robots or followers of a religious sect, such is their unflinching dedication.”
The article compared them to androids and Moonies, operating in a high-stress, high-reward environment where “blunders are not tolerated.” They “live almost permanently out of suitcases as they move between the group's more than 50 offices in 40 countries.” Yet Glencore’s traders feel such a deep allegiance to the firm’s charismatic but “down-to-earth” chief executive, Ivan Glasenberg, that they often join him for his daily run, sources told Reuters.
Glasenberg, a 54-year-old billionaire, started as a coal trader more than 25 years ago. He is also a champion speed walker, who missed competing in the Olympics due to a citizenship technicality.
Glasenberg is by no means the only high-testosterone ambulatory executive at the firm.