[miningmx.com] – GLENCORE Xstrata acknowledged it had been disappointed by the lack of interest in its Johannesburg listing, but said it would wait for 12 to 18 months before judging whether the move was a success.
“It hasn’t got to levels we would have liked on the volume side; there isn’t the shareholding we would have expected,” said Ivan Glasenberg, CEO of Glencore Xstrata in comments to media following the group’s full-year results on February 4.
“We haven’t got to 5% but we will wait 12 to 18 months to judge the achievement. We can get there and there is investment appetite and knowledge,” he said.
In order to be indexed in the top 100 shares on the JSE, about 5% of the company’s share register would have to be in South African hands. Glencore Xstrata spokesman, Charles Watenpuhl confirmed the shareholding was about 1% of total issued shares.
“We are working on a few things. It depends whether the path can be accelerated or whether we can slowly let it dribble up,” said Glasenberg.
Hanre Rossouw, an analyst for Investec Asset Management, said one possible means of increasing the South African element in the share register of Glencore Xstrata would be to conduct an equity-based deal in the country.
“There’s a number of things the group can do. It could buy-out partners issuing shares in the topco,” he said. “Then a partner would have something tradeable; a traded asset against which it can borrow,” he said.
Glasenberg said the group remained on the look-out for potential acquisitions, especially in the coal sector. He said the group would consider a bid for Total Coal SA provided the assets met Glencore Xstrata’s internal rates of return.
“It’s somewhat surprising that there hasn’t been more demand for Glencore Xstrata shares; an additional vehicle would have been attractive,” said Michael Kavanagh, an analyst for Noah Capital. “I would expect a concerted investor roadshow would help. The general investors would know of the stock but perhaps not have an understanding of the business model,” he said.
Rossouw said not being indexed created a “chicken-egg” scenario for the Swiss group. “Unfortunately funds are very benchmark aware in the industry. We bought some stock and we welcome the listing on the JSE,” he said.
