The Glencore Jew in the glare - The Jewish Chronicle

Just a few weeks ago, the name Ivan Glasenberg would have attracted little recognition outside of Switzerland, where his company Glencore is based. But the decision to list on the London and Hong Kong stock markets has catapulted the South-African entrepreneur to the top of Europe's rich list.

On the release of the company's massive prospectus, the FT chose to picture a smiling Glasenberg beneath a picture declaring him to be 'Glencore's $10 billion man.' Fund raisers will be salivating at the thought of tapping into a new source of wealth, which leaves the kind of capital accumulated by Goldman Sachs partners looking like second division.

Nothing about Glencore, Glasenberg or the five other dollar billionaires created by this offering, including London based oil trader Alex Beard, is simple.

Indeed, the share offering is the largest ever to come to the London Stock Exchange. Anyone seeking further detail of the nature of the business can choose to download the 1,637-page prospectus weighing around 11 pounds. But beware: when it was released it proved bulky enough to clog up IT systems right across the Square Mile.

So, how does anyone get to be as rich as Glasenberg? Glencore, which grew out of the commodity-trading empire founded by the fugitive (and then pardoned) businessman Marc Rich, shrewdly recognised the opportunity provided by commodity trading and natural resources.

Moreover, as a private partnership based in Switzerland, it was able to recruit the best traders, pay the highest salaries and develop the strongest position in key markets, without attracting the intervention of regulators.

Glencore is not unknown in London. Its most valuable stake is the 34 per cent it holds in the London-based mining group Xstrata, headed by Mick Davis, a luminary of the UK Jewish community. It also has strong links to the Rothschild dynasty. Nat Rothschild - son of Lord Jacob Rothschild and one of ths year's Sunday Times Rich List's biggest risers - is an investor in the mining group's convertible bonds and stands to make a healthy gain as a result of flotation.

The younger Rothschild is also close to Russian oligarch Oleg Deripraska. His main vehicle is Rusal, the Russian aluminium group, in which Glencore owns 8 per cent and where Glasenberg is a director. Among Glencore's directors is Lenny Fischer, who heads Brussels based investment group RHJ Intern ational (which owns investment bank Kleinwort Benson). Lord Rothschild is a former member of the RHJ board and his investment trust RIT owns a stake.

Glencore itself has a controversial history. Past allegations include political wheeler dealing in some of the nastiest parts of Africa and environmental despoliation. All of this was personally disputed by Glasenberg when I spoke with him during the run-up to the current stock market float.

So why is Glasenberg giving up the protection Glencore has enjoyed as a pri vate partnership for the glare of disclosure which a public float requires? There are several major reasons. The first is that a stock market float allows a partnership, like Glencore, to turn the holdings of the partners into cash. If the structure were to remain the same, the personal stakes would have to be held in the business as capital to support borrowing and operations on the commodity markets. The new currency of shares will eventually, after a five-year lock-out in which the major partners cannot disgorge their holdings, allow the holders to cash in. As importantly, it will allow key traders, including those newl y recruited, to own equity in the company and take their money out when they leave.

At present, remuneration is confined to what is paid out in salary and bonuses. Shares can offer even greater rewards.

Finally, the equity raise, together with the ability to issue more paper in the form of shares, gives Glencore the freedom to expand its empire. Glasenberg is known to be keen to mop up so-called minority stakes.

Among these are a stake in zinc miner Kazzinc based in Kazakhstan in which it already controls 50.3 per cent. The most valuable stake is the 34 per cent holding in Xstrata.

The Glencore float is a triumph for entrepreneurship. However much of its success had been dependent on its ability to operate in the s hadows. That is no longer the case and its domination of certain commodity markets and mining in difficult parts of the world is certain to attract adverse reaction. The fear must be that as the layers are peeled away the regulators will become more involved and the lustre will fade.