HONG KONG — A monumental initial public offering of Glencore International PLC was completed May 19, raising gross proceeds of more than $10 billion.

Under the offering, Glencore, which has a major agricultural trading, storage and processing business, placed 1,137,331,973 ordinary shares at a price of 530 pence (85¢) per share and 31,250,000 new ordinary shares to Hong Kong investors at HK$66.53 ($8.56).

Glencore estimated the total number of ordinary shares with completion of the offering at 6,922,713,511, prior to the exercise of underwriters’ over-allotment option. The over-allotment option of up to 116,858,197 shares, equating to 10% of the ordinary shares in the offering, may be sold for 30 days.

Following the offering, Glencore estimated its directors and employees retained an 83.1% stake in the company’s ordinary shares.

The IPO created a publicly-traded commodities business with a market capitalization of $59.2 billion. By way of comparison, the market capitalization of Bunge Ltd. is about $11 billion; Archer Daniels Midland Co., $20 billion; and The Goldman Sachs Group Inc., $71 billion.

Glencore is an integrated producer and marketer of commodities, with activities in metals, minerals, energy products and agricultural products.

“As a marketer, Glencore is able to differentiate itself from other production entities as, in addition to focusing on minimizing costs and maximizing operations efficiencies, Glencore focuses on maximizing returns from the entire supply chain, taking into account its extensive and global third-party supply base, its logistics, risk management and working capital financing capabilities, extensive marketing insight business, optionality, its extensive customer base, strong market position and penetration in most commodities and economies of scale,” the company said. “In contrast, this is not the business model of Glencore’s mainly industrial competitors.”

Established in 1974 as Marc Rich + Co. AG, Glencore initially was focused on the physical marketing of metals, minerals and crude oil. The company acquired Granaria Group, an established Dutch grain trading company, in 1981, forming the basis of Glencore’s Agricultural products business segment.

Beginning in 1987, the company shifted from a pure commodity-marketing company into a diversified natural resources group. The change was made possible through acquisitions in mining, smelting, refining and processing.

The company’s name was changed to Glencore International in 1994, with a management buyout of Rich. The company has been owned by its employees since then.

In a discussion of its Agricultural Products segment, Glencore said EBIT before exceptional items was $717 million in 2010, up from $345 million in 2009 and $678 million in 2008. The 2010 figure equated to 14% of the company total EBIT before exceptional items.

The company’s agricultural marketing volumes in 2010 were 20.9 million tonnes of grain and 9.4 million tonnes of oilseeds/oil. Overall, the company said it estimated its market share at about 8.7% of addressable market for grains in 2010 with “significant market share in the Europe, the CIS and Australia.”

The company owns or has a stake in agricultural processing businesses in Argentina, Brazil, the Ukraine, Germany, The Netherlands, Paraguay and other CIS nations. Its largest processing business is Moreno, based in Argentina. The company has annual processing capacity of 1.9 million tonnes of oilseeds. In Argentina, Brazil and Uruguay, Glencore has stakes ranging from 50% to 100% in a variety of wheat flour and rice milling businesses with an aggregate milling capacity of 1.5 million tonnes a year.

The company’s shares are being included in the FTSE 100 under the fast entry rule of the London Stock Exchange. The FTSE 100 is an index that includes the 100 largest capitalized companies on the exchange.

In the prospectus issued in connection with the offering, Glencore said earnings in 2010 totaled $1,646 million, up from $1,079 million in 2009 and $391 million in 2008.

Net proceeds from the offering, estimated by Glencore in the prospectus at $7.5 billion, were expected to be used for three principal purposes:

  1. $2.2 billion to increase its holdings of Kazzinc, a zinc business based in Kazakhstan.
  2. $5 billion for three years of budgeted capital expenditures
  3. The reduction of the company’s borrowing costs and to improve its financial flexibility.