Glencore shows how not to launch an IPO
By Chris Hughes
The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
LONDON — Glencore’s flotation has become an excruciating case study in how not to organise an initial public offering. The Swiss commodities trader made a serious error by confirming its intention to float without having finalised the appointment of an independent chairman. Hours later, a chairman was found: but in circumstances that are close to comedy.
When the market opened on Thursday morning, Glencore unveiled its IPO with news that a chairman would be appointed “shortly”. That looked amateurish at best. It gave the impression that corporate governance was an afterthought.
Whispers subsequently circulated that John Browne, the former chief executive of BP, was emerging as a frontrunner for the job. Had Browne been confirmed in the role, the clumsiness might have been quickly forgotten. True, Browne left BP in disgrace in 2007 after lying to an English court about his private life. But his international and boardroom experience would have been a big asset to Glencore. In the end, the job went to Simon Murray, a member of the Hong Kong business elite.
Murray was quite open about his candidacy in recent days. But he didn’t seem to be in the loop — or in the lead. He is a tough cookie, having served in the French Foreign Legion and trekked to the South Pole. And he has big-cap board experience from Vodafone, Richemont and Essar Energy. But Murray is hardly the heavy hitter investors were expecting. Worse, the delays and leaks surrounding his eventual appointment have weakened his authority.
The same goes for the pallid endorsement from Ivan Glasenberg, Glencore’s chief executive. Glasenberg said that Murray would make an “invaluable addition” to the board, which contains a pre-installed slate of non-executives that may or may not be to Murray’s liking.
A chairman is indeed invaluable. But Murray’s role should be more than additional. The chairman is meant to lead the board. And in Glencore’s case, the chairman has a central role representing the interests of new shareholders who will be in a minority. It’s a serious matter. This looks more like farce.