Special report: The biggest company you never heard of

BAAR, SWITZERLAND (Reuters) - On Christmas Eve 2008, in the depths of the global financial crisis, Katanga Mining accepted a lifeline it could not refuse.

The Toronto-listed company had lost 97 percent of its market value over the previous six months and was running out of cash. Needing to finance its mining projects in the Democratic Republic of Congo -- a country which has some of the world's richest reserves of copper and cobalt -- Katanga's executives had sounded the alarm and made a string of calls for help.

Global credit was drying up, the copper market had fallen 70 percent in just five months, and Congo -- still struggling to recover from a civil war that killed some five million people - was the last place an investor wanted to be.

One company, though, was interested. Executives in the wealthy Swiss village of Baar, working in the wood-panelled conference rooms in Glencore International's white metallic headquarters, did their sums and were prepared to make a deal. Their terms were simple.

They wanted control.

For about $500 million in a convertible loan and rights issue, Katanga agreed to issue more than a billion new shares and hand what would become a stake of 74 percent to Glencore, the world's biggest commodities trading group. Today, with copper prices regularly setting records above $10,000 a tone, Katanga's stock market value is nearly $3.2 billion.

Deals like Katanga have helped turn Glencore into Switzerland's top-grossing company and earned it comparisons with investment banking giant Goldman Sachs.

In the world of physical trading -- buying, transporting and selling the basic stuff the world needs -- Glencore is omnipresent and controversial, just as Goldman is in banking. Bigger than Nestle, Novartis and UBS in terms of revenues, Glencore's network of 2,000 traders, lawyers, accountants and other staff in 40 countries gives it real-time market and political intelligence on everything from oil markets in Central Asia to what sugar's doing in southeast Asia. Young, arrogant, and often brilliant, its staff dominate their market. The firm's top executives have forged alliances with Russian oligarchs and well-connected African mining magnates. Like Goldman, Glencore uses its considerable heft to extract the best possible terms in every deal it does.

Some might add that Glencore also fits the description that Rolling Stone magazine gave to Goldman: "a great vampire squid wrapped around the face of humanity".

Sometime in the coming weeks, Glencore is likely to announce its Initial Public Offering. The firm currently operates as a privately held partnership, with staff sharing the profits according to a performance-based incentives scheme. Sources familiar with Glencore's plans say it may list 20 percent of the company, possibly split between the London Stock Exchange and Hong Kong. Such a listing could yield up to $16 billion and value the firm at as much as $60 billion.

Fueled by the lofty prices in many of the raw materials that Glencore buys, mines, ships and sells, the float would be among the biggest in London's history. It could launch the firm onto the FTSE 100 index alongside resource giants such as BHP Billiton, Rio Tinto, and Royal Dutch Shell and from there into the pension funds and investment portfolios of millions of people who know virtually nothing about the secretive giant. It would also represent a huge payday for investment banks -- perhaps $300 to $400 million, according to estimates by Freeman & Co., a mergers and acquisitions consultancy.

At the same time, it would force a company that for four decades has thrived outside the limelight to reveal some of its secrets. Can it withstand becoming a household name? Does it risk losing its prized traders? Given Glencore's impeccable timing in deals, is an IPO a certain sign that we've reached the top of the commodities cycle?

"Their knowledge of the flow of commodities around the world is truly frightening," says an outsider who has worked closely with senior Glencore officials and who, like most people interviewed by Reuters for this report, declined to be identified speaking about the company for fear it could jeopardize sensitive business relationships. Glencore executives declined to comment on the record, though the company did issue a statement about its current disclosure policy.

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