Glencore US Listing Plan Falters as S&P 500 Seen Out of Reach

4slnwg4zvl{13agvbfrh4zos_media_dl_1.png Bloomberg

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(Bloomberg) — Glencore Plc’s decision to keep its stock-market listing in London shows the power of index funds.

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The company said a US listing wouldn’t have increased shareholder value, with its chief executive officer noting it was unlikely the mining giant would have gained inclusion in the S&P 500.

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Joining the index would require funds tracking the benchmark to buy and hold Glencore shares, bolstering the company’s valuation. Yet to be added to the S&P 500, a company must be domiciled in the US, according to S&P Dow Jones Indices, and Glencore doesn’t meet that criteria.

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The decision to stay in London is “mainly since it seems unlikely it can make the S&P 500,” Chris Beauchamp, chief market analyst at IG, said in emailed comments.

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Keeping Glencore is a win for the exchange, which has been losing listed companies to acquisitions amid a dearth of initial public offerings. The retention reinforces London’s attractiveness for metals and industrials companies, as it’s already drawn two fresh listings to its bourse in recent months.

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Glencore is headquartered in Baar, Switzerland, and its registered office is in Jersey, Channel Islands. The company said in February it was considering moving its primary listing away from London to increase its valuation. 

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The company’s shares have fallen about 47% since 2022, underperforming peers.

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Glencore’s coal-mining business, which was extremely profitable during recent energy crises, has faced criticism on environmental grounds, and has become less lucrative due to low prices.

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“Rather than being a ringing endorsement of the merits of a UK listing, it may instead reflect the fact the company is not exactly in the best place to appeal to a new investor base elsewhere,” Danni Hewson, AJ Bell’s head of financial analysis, said in emailed comments. 

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Glencore is already listed in a natural market for a big mining company. Out of five of the world’s major diversified miners — Glencore, Anglo American Plc, Rio Tinto Plc, Vale SA and BHP Group Ltd. — only Brazil-based Vale doesn’t maintain a listing on the London Stock Exchange.

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In 2021, BHP decided to unify its listing in Australia, but maintained a standard listing in London. And last year, Rio Tinto fended off a proposal by a shareholder for the company to follow BHP’s example.

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Recent listings have been a boon for London’s commodities sector. Metlen Energy & Metals Plc moved from Athens at the start of this week, and Valterra Platinum Ltd., a spinoff from Anglo American, began trading in June.

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For many companies, such as payments business Wise Plc and building-materials maker CRH Plc, listing in New York makes sense because they get a large proportion of their revenue from the US. British equipment-rental company Ashtead Group Plc last year noted that it is “substantially a US business” when it proposed moving its main listing. But less than 20% of Glencore’s revenue comes from the US. 

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—With assistance from Thomas Biesheuvel and Lisa Pham.

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