Commods trader Noble: New investor may buy big stake

SINGAPORE (Reuters) - Independent commodities firm Noble Group (NOBG.SI) announced advanced talks with an unidentified investor for a major stake in the $5.5 billion company, granting access to a mix of hard assets and trading acumen.

While no potential buyers could be immediately identified, the deal may confirm a shift in the strategy of big emerging-market governments and state companies to pursue resource firms that give them trading leverage in global markets as well as access to the raw materials they need to feed their economies.

As the only major global commodity trading house with a public listing, Noble may be even more attractive than bigger rivals like Glencore GLEN.UL, to which it is often compared and has also been reportedly seeking to sell a small stake.

"Investors have been in discussion with Noble with a view to their becoming shareholders in the company. Noble is engaged in detailed negotiations with one of these investors," the firm said in a statement to the Singapore stock exchange.

The talks could lead to "the purchase of a major shareholding" by the unnamed investor, the firm said. It also said in the statement it was optimistic about current trading conditions.

Founded by Richard Elman in 1987 with $100,000 in savings, Hong Kong-based Noble has expanded into a global empire that includes operations from sugar and ethanol in Brazil, soy crushing facilities in China and coal mines in Australia.

But Elman has also continued to build up its trading operations in parallel, enabling Noble to capitalize on market volatility as much as rising commodity prices. Its latest focus is building a global oil trading team, for which it has hired 14 London-based traders since March.

That potent combination of supply and traders may have attracted the notice of sovereign wealth funds, which have made clear that they want a piece of the commodity boom.

"Commodities are very much in interest these days," said Lee Wen Ching, an analyst at OCBC Securities in Singapore. "Noble is very well diversified across various assets such as agriculture, metals and energy. It is a key beneficiary of the economic recovery."

This summer Olam International (OLAM.SI), which trades in commodities such as cotton and wheat, sold a 13.76 percent stake to Singapore's Temasek Holdings TEM.UL, while PetroChina (0857.HK) bought oil refiner Singapore Petroleum SPCS.SI.

Bank of America-Merrill Lynch said in a report on Tuesday that Noble's chief operating officer met over 30 investors in Europe earlier this month.

It said Noble's profits will likely grow robustly in the next three to five years, with new capacities in sugar, soybeans and potentially natural gas slated to come onstream in the next year.

"We believe Noble could raise capital via debt and equity to fund its natural gas venture," the bank said, maintaining a "buy" rating on the stock with a target price of S$2.40.

The firm's market capitalization is about $5.5 billion, based on its last traded price of S$2.30 a share.

Noble's shares have been suspended from trading since Tuesday. Its shares have more than doubled this year, beating the benchmark Straits Times Index .FTSTI which is up by half.

(Reporting by Kevin Lim and Saeed Azhar; Editing by Neil Chatterjee and Muralikumar Anantharaman)