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Glencore: The Next Goldman Sachs

Goldman Sachs executives made similar statements in explaining the rationale for that firm's historic IPO in 1999, according to William Cohan, a former investment banker at JPMorgan Chase (JPM - Get Report) and Lazard (LAZ) whose book, "Money and Power: How Goldman Sachs Came to Rule the World" was published this week.

"Everybody always says that, and sometimes it means a bunch of nothing," Cohan says. He says Goldman had lots of reasons to go public, though most of them relate to the importance of having "cheap money."

One reason is competition. Goldman competitors like Morgan Stanley (MS - Get Report), Bear Stearns and Lehman Brothers had already gone public, giving them access to that cheap money. That creates a greater opportunity for investments, acquisitions, and, yes--cashing out.

"For Glencore, I'm sure the principals don't need the money, but having easy access to other people's money is hugely important and by the way, why not?" Cohan says, noting that the recovery in stock and commodities prices provides the first opportunity for a public offering in some time.

Indeed, the impending deal is fuelling talk of a bubble, as many speculate the savvy minds who run Glencore want to get out before the market falls.

Goldman Sachs helped add fuel to such speculation Tuesday when a report by commodities strategist Jeffrey Currie advised investors to sell a basket of commodities-linked securities, suggesting "headwinds" for copper and platinum, as well as signals oil currently offers more potential risk than reward for investors.

Nonetheless, Goldman still sees "upside potential" for commodities over the next 12 months and many others who depend on the market for a living remain optimistic the run will continue.

"While bullish investor sentiment is required for an IPO such as Glencore, that in and of itself is not a signal of a coming decline," says George Stein managing director of New York-based Commodity Talent LLC, a global recruiting firm focused on commodities.

Stein says there have been "scattered cutbacks" at commodities divisions of Wall Street banks due to new restrictions on proprietary trading and investing but that "risk demand" remains among the firm's clients in power trading, agricultural commodities, metals and "standbys" like oil trading.
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