Glencore, Trafigura said set to invest in Merdeka’s HK listing

Glencore Plc, Mercuria Energy Group and Trafigura Group are among key investors planning to buy shares in the Hong Kong listing of Indonesian gold miner PT Merdeka Gold Resources, according to people familiar with the matter.

The commodity trading giants are planning to participate as cornerstone investors, which get guaranteed allocation in a deal in exchange for holding their allocations for a period of time, the people said, asking not to be named to discuss a private matter. Deliberations are ongoing, and details of the deal may change, the people added.

The Jakarta-listed company is set to start taking investor orders for its second float as soon as Wednesday, the people added. The company is aiming to raise upwards of $300 million, the people said. It previously considered raising at least $500 million. The listing’s size ultimately depends on the trajectory of gold prices, people familiar with the matter have said.

Representatives for Glencore, Merdeka Gold, Trafigura and Mercuria declined to comment.

While gold prices have more than doubled over the past three years, prices have shifted lower this year after the Middle East conflict lifted energy costs and fueled bets that interest rates will need to stay higher for longer, dimming the appeal of non-yielding bullion.

Jakarta-listed shares of Merdeka Gold, whose market capitalization stands at $5.8 billion, have more than doubled since the company’s stock-market debut last September, though they have fallen from an April peak. Global investors have rapidly lost confidence in Indonesia as the commodity-rich nation’s stocks tumbled and after index compiler MSCI Inc. earlier this year said the country could be downgraded to frontier status from emerging market.

(By Dave Sebastian and Archie Hunter)