Glencore may float agriculture business, in talks about asset sales

Glencore has revealed it is examining a potential initial public offer (IPO) of the commodity group's agriculture business and has been in talks about the potential sale of some infrastructure assets.

The FTSE 100 group's chief financial officer Steven Kalmin revealed on an investor call following Thursday morning's 'investor update', which increased the company's planned target of reducing debt and preserving capital, that the company was mulling a possible flotation of the agricultural subsidiary instead of selling its stake.

Chief executive Ivan Glasenberg stipulated that the company would not sell its majority stake in the unit unless "someone throws a massive number".

The CEO added he had received offers for some of Glencore's larger assets, and that management was talking to several parties about potentially divesting some infrastructure assets.

Glencore increased its planned target of reducing debt and preserving capital to the tune of $13bn (£8.6bn), after September's debt reduction initiatives that included a target of $10.2bn.

So far $8.7bn of the target has already been locked in.

Glencore stock, which was up 11% to 92p by early afternoon, was somewhat of an anomaly in the gradually worsening commodity sector, which was hit by Brent crude falling below $40 per barrel once again.

On the debt cut plans, analysts at SP Angel said, unlike Anglo American’s "rabbit in the headlights" reaction to ow commodity prices, Glencore's plan was "more considered" and should see the company making money against current spot prices and positioning themselves should prices go lower.

"This should give comfort to investors that there is still capacity to generate profits against the current backdrop. Also cut backs in supply and expansionary capex should be supportive of medium to long term prices."