Glencore International on Wednesday unveiled details of an initial public offering in which it will look to raise as much as $11 billion.
Following are reactions to the company's statement.
UNNAMED PORTFOLIO MANAGER AT A UK INVESTMENT COMPANY
It depends on your outlook on commodities and the outlook is not as rosy as it was a couple of months ago. The key thing Glencore needs to bear in mind is yes, they have an interesting model, but not everyone has bought into the idea of how the business is run.
To be pricing Glencore over $55 billion is way out of line, I would not buy that. Under $50 billion it may be worth a bid, but even then there's the outlook for commodities. I'm a big fan of commodities but increasingly I've been a bit cautious especially given developments in China.
The maximum allocation we would put is around two percent because I believe we can buy this stuff cheaper. (It is) way, way below benchmark allocation because we already own the likes of Xstrata... If you are pricing Glencore at this rate, you are underpricing Xstrata.
UNNAMED UK EQUITIES INVESTMENT MANAGER
My intuitive view is that this (commodities) sector is well up the hill at the moment, and the timing of this floatation is more attractive to them than it is for investors.
If the sector continues to run hard, they will of course make money but my overall view is that commodities have had a remarkable run already and it's a little late to start jumping upon new investments.
I think that is partly reflected in the valuation, which is a little less than the market expected to see.
We are moving toward the end of the run in this sector. I mean, it's not as if commodities prices are going to double again from here and when they come down, they come down very fast as well.
HELEN LAU, ANALYST WIH UOB KAY HIAN
Glencore's valuation is attractive and the price to earnings multiple is at a discount to some of the large commodities traders.
Glencore is a diversified business. Not only are they continuing to expand their traditional commodities trading business, they are also investing in upstream business. That is where it should bring in value.
Going forward, Glencore should benefit from global economic recovery. I don't think Glencore will be aggressive in M&A early on as publicly listed company.
When such a large scale IPO hits the market, there are some concerns on whether this is a sign of commodity cycle peaking.
MIRIAM HEHIR, CREDIT RESEARCH ANALYST, RBC CAPITAL MARKETS
Glencore also said that in Q1, its financial and operating performance has continued to benefit from improved market conditions, as also experienced in the final months of 2010. Strong market conditions are continuing into Q2 it said and the company is 'well positioned' for the remainder of 2011.
The IPO remaining on track and an encouraging trading update continue to support the credit story here. We expect further relative spread outperformance as we move toward May 19th, notwithstanding the strong performance ahead of IPO confirmation in mid-April and a somewhat flat performance since.
JOHN MCGLOIN, ANALYST, COLLINS STEWART
The existing shareholders are mostly staying, so if they believe in the value of the company they should be happy to see the share price rise rather than trying to get full value at the point that it lists.
The one thing you don't want to do, I think, when you list any company, is overprice it and then have a negative momentum that you have got to try to turn around to try to get the share price up.
The valuation has been pushed down by investors who want to come in but are not going to come in at the range that the analysts came out with.
ANDY MANTEL, CHIEF EXECUTIVE, PACIFIC SUN ADVISORS
Commodity prices are very high now and growth is on an upswing globally, so the timing is quite good, Mantel said, describing the offer as fairly valued to a bit pricey.
It's smart for investment bankers to be conservative in their pricing, so as not to disappoint too many people.
JOHN MEYER, ANALYST, FAIRFAX
They've given us a pretty wide price range. It's a bit hard to give a reaction to that because we don't know which part of the range they're coming in at.
I'm sure it's realistic. They seem to have reduced the value of the IPO. The mid-point implies a market capitalization of about $61 billion. We're looking for Glencore to leave something on the table for investors. We expect it to be a successful float. It's well-backed by some very high-profile cornerstone investors. It is a very professional issue.
It's difficult to have expectations with a group that is as secretive as Glencore, although they are revealing more.
(Reporting by Sarah Young, Julie Crust, Chris Vellacott, Sinead Cruise and Denny Thomas; compiled by Paul Hoskins)