Among all the various regions of the corporate jungle, few have been quite so sluggish throughout the recession as the capital markets. Initial public offerings (IPOs) have been as rare as a Liberal Democrat voter at the local elections.
Despite the depressing market there was one deal that could dominate the minds of a whole raft of corporate lawyers for months to come – Glencore’s mammoth $12bn (£7.31bn) flotation on the London and Hong Kong stock exchanges.
Among the City practices in the scramble to get a piece of this most lucrative pie, the winners seem to be magic circle pair Clifford Chance and Linklaters.
An Anglo-Asian Linklaters team is advising commodities giant Glencore, with corporate partner and mining specialist Charlie Jacobs leading alongside Hong Kong corporate partner Rob Cleaver.
Clifford Chance snared the mandate advising the syndicate of banks acting as lead arrangers on the deal.
Glencore is one of Linklaters’ most prized clients, and Jacobs also acted for the company on last year’s $2.2bn bond issue. That deal was widely seen as a precursor to a flotation.
Capital generated by the listing will most likely be used to fund a wide range of new acquisitions for Glencore as it looks to become an even bigger player in one of the few markets to have come through the recession in a relatively robust shape.
A slew of M&A activity by the company will have corporate lawyers at several firms – not just those involved in the listing – salivating. But what is less likely is a major return of the IPO market.
Most capital markets lawyers see the Glencore listing as an outlier despite – or possibly because of – its size.
“Investors do not like the instability in the world at the moment,” one corporate partner said, typifying the mood of the City. “A lot of people have been saving their bucks for this one so it will continue to be difficult, especially this side of the summer.”
Japan’s nuclear crisis was cited as a reason when earlier this year Dubai-based Topaz Energy and Marine pulled its proposed $500m London listing. However, valuation was also seen as a problem for the flotation.
Investors are still smarting from the lukewarm response given to several high-profile IPOs last year, not least of which was the listing for online grocery retailer Ocado, which saw shares initially trade at up to 40 per cent below valuation.