Glencore International Plc’s initial public offering, the world’s biggest this year, generated trading commissions worth as much to London brokers as 70 percent of all trades in the FTSE 100 Index’s stocks.
Some 3 billion pounds of Glencore shares changed hands on the commodities trader’s debut yesterday, generating commissions of as much as 4.5 million pounds ($7.3 million), data compiled by Bloomberg and Tabb Group LLC show. That compares with a turnover of 4.1 billion pounds for all 102 companies in the benchmark gauge and was 11 times more than Rio Tinto Group, the second-most-traded stock by value.
The $10 billion IPO was a one-day boon for brokers facing declining volume. Trading in FTSE 100 companies has averaged 826 million shares a day so far in 2011, compared with 1.08 billion over the previous two years, according to Bloomberg data.
“Everyone was really excited about the stock and it had huge volumes,” said Lex van Dam, a London-based fund manager at Hampstead Capital LP, which oversees $500 million. “There had been a lot of people trying to get involved. That said, I hadn’t actually heard anyone say the stock is really cheap.”
About 555 million Glencore shares were traded yesterday, Bloomberg data show. Transaction costs in Europe average about 15 basis points, or 0.15 percentage point, when investors use broker services, and less than 4 basis points for a direct- market access platform, according to Tabb Group.
Shares of Glencore, the world’s largest commodities trader, yesterday closed at its issue price of 530 pence after rallying as much 3.8 percent to 550 pence earlier in the day.
The IPO came on the same day that LinkedIn Corp. first sold shares to the public. The largest professional-networking website more than doubled to $94.25 on the New York Stock Exchange yesterday.
Glencore’s share sale involved about 20 banks in total. Citigroup Inc., Credit Suisse Group AG and Morgan Stanley managed the deal as global coordinators, along with Bank of America Corp. and BNP Paribas as joint bookrunners. Barclays Plc, Societe Generale SA and UBS AG were co-bookrunners.
The sale attracted 12 cornerstone investors including BlackRock Inc. and Abu Dhabi’s sovereign wealth fund who are locked into their holdings for six months, according to the prospectus.
Demand for the stock will likely be bolstered by index- tracking funds in the days leading up to Glencore’s admission to the FTSE 100 on May 25. The funds may buy about 13 percent of the shares on offer in the IPO, Paul Galloway, a London-based analyst at Sanford C. Bernstein & Co., wrote in a May 6 report.