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Glencore’s billionaire executives share $80m windfall payout

As first half profits rise sharply, commodity trader announces interim dividend, but many investiors remain out of profit following May flotation

Glencore’s five billionaire executives are to share a further 0m (£80m) windfall as the company announced its first dividend since its poorly received £37bn flotation in May.

The secretive Swiss-based commodity trader announced an interim dividend of five cents a share after booming commodity markets triggered a 34% rise in first half profits to .47bn. However, while the shares rose 13.1p to 402.7p they are still trading at a 24% discount to the 530p float price, meaning that investors such as UK pension funds that bought into the offer are severely out of pocket.

The payout to shareholders will result in a m cheque to chief executive Ivan Glasenberg, who owns a stake of almost 16% in the company. Meanwhile, star metals traders Daniel Mate and Telis Mistakidis will both pick up slightly more than m each, while coal executive Tor Peterson and UK-based oil man Alex Beard will receive more than m and million respectively.

All five became paper billionaires following the company’s flotation, which immediately catapulted the group into the FTSE 100 and, subsequently, meant that UK pension funds tracking the index were forced to buy the shares.

The directors will receive the dividend payments along with other shareholders and will argue they have shared some of their pain. Glasenberg’s stake is now worth £1.38bn less than in May, meaning he has lost around £100m a week. He brushed off any share price woes by painting the troubled stock market as an opportunity for Glencore to make cheaper acquisitions.

“We view the [flotation] process as the next stage of our journey in value creation of the company,” he said. “We welcome our new shareholders with a payment of a maiden dividend of five cents… I would rather be looking at buying assets now on the equity side. Markets have come off considerably. On the private company side people are not as optimistic as before. So now is definitely a better time to buy than six months ago when companies were trading at much higher levels. It is definitely an opportunistic time to look at acquisitions.”

On Wednesday Glencore launched a A8m (£170m) cash bid to acquire the 27% of an Australia-based nickel miner it does not own. The commodities trader is offering A{content}.87 a share for the rump of Sydney-listed Minara Resources, a 36% premium on Tuesday’s closing price but still a 15% discount on the shares’ 2011 high. That move followed the trading house offering 5m for the Mina Justa project, a copper prospect in Peru, while Glasenberg has made no secret of his desire to merge his company with Xstrata, the London-listed miner of which Glencore owns 34%.

Overall, the interim results revealed that Glencore’s pre-tax profits rose by 34% to .47bn on revenues up from bn to bn in the six months to 30 June. Operating profit for Glencore’s trading, or marketing, division rose by 45% year-on-year in the first half, which cheered analysts, even though the performance dipped in the second quarter.

Mining analysts at Liberum said in a note: “Glencore has more closely tracked the investment banks and traders than its mining peers … We believe the reason is fear of declining commodity trading profitability and access to liquidity. Marketing’s first-half EBIT is up 45% year-on-year, indicating Glencore can thrive in difficult trading markets.”

On the industrial side, which includes Glencore’s metals, energy and agricultural production, operating profits rose by 54%, boosted by higher commodity prices. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds