Glencore looks to let the light shine in

One of the most notoriously hush-hush commodity players in the world is set to open both its equity and its books to the public as Glencore International is set to make an initial public offering.

The announcement comes after years of speculation, and the IPO of one of the world’s most powerful and thoroughly vertically integrated commodity companies could reach as high as US$11 billion with listings in London and Hong Kong.

The London part of the offer is expected to raise up to US$8.8 billion, while the Hong Kong aspect could add another US$2.2 billion. After the IPO, the free float is expected to be between 15 and 20%.

And while the company is targeting an offer size of between $9 billion to $11 billion a 10% over-allotment option could take the proceeds up even higher to $12.1 billion.

In a statement connected to the proposed IPO the company broke down how it plans to spend some of that new capital. It says US$5 billion of proceeds are earmarked for capital expenditure over the next three years while US$2.2 billion will go towards increasing its stake in miner Kazzinc – of which Glencore already owns 50.7% of.

While Glencore made its name as a commodity trader – it was founded by the infamous commodity trader Marc Rich – it is also owns mines, smelters, refineries, shipping vessels and storage facilities.

The company reported revenues for 2010 of US$145 billion – a 36% increase of the year previous. That revenue came out of its three separate business segments of metals and minerals, energy product and agricultural products.

Founded in 1974 as Marc Rich + Co, the company was renamed Glencore in 1994 after Rich sold his share to senior traders at the firm. Rich was then a wanted man in the U.S. after being convicted of tax evasion and illegally trading oil with Iran during the hostage crisis. While Rich lived in Switzerland while wanted by U.S. authorities Bill Clinton pardoned him at the end of his presidential term.

The move to a public company not only marks a remarkable shift in corporate culture, but will also bring a windfall of cash to some of the senior traders who currently own the company. Glencore’s chief executive Ivan Glasenberg, counts among those set to make millions as he is reported to have a 15% stake in the company. None of the group of current owners, however, will be able to sell shares for the first five years of public trading.

Ironically, the move to cash in on the public’s appetite for commodities comes on the heels of a Goldman Sachs report which warned that commodities could be set to cool from their recent strong run. The report had the effect of sending commodity prices down. Goldman was particularly bearish, in the short term, on copper and oil.

But whatever the prices for commodities Glencore can be expected to generate a significant amount of interest from investors. And indeed, the large amounts of revenues generated from trading commodities are somewhat shielded from fluctuations in the underlying commodities value.

As part of its plan to IPO the company also announced it has appointed Simon Murray as its non-executive chairman.

Murray is currently the executive chairman of General Enterprise Management Services International and former managing director of Hutchison Whampoa. He is also a former French Foreign Legionnaire

In a statement Glasenberg pointed to Murray’s significant experience in and insight into global business, as a key attribute.

Five other non-executive director positions were announced as well, one of whom, Peter Coates, is connected to Glencore’s current management as he recently served as chairman of Minara Resources, which is majority owned by Glencore.

Best practices in corporate governance call for a majority of the board members to be independent from management.

The most recognizable name on the board is Tony Hayward, who made plenty of headlines when he was the head of BP (BP-L) during the Horizon oil spill of 2010.