Mercuria, investing upstream, mulls SWF link
LONDON (Reuters) - Mercuria, one of the world's biggest independent energy trading companies, said on Thursday it was considering a range of ways of raising capital, including a possible tie-up with a sovereign wealth fund.
Chief Executive Marco Dunand said Mercuria was spending up to $400 million a year on upstream assets, including oil and coal reserves. It has funded investments so far mostly through its own cash flow and has also issued some debt.
The Geneva-based company, which trades oil, gas, coal and a range of derivatives and expects to have a turnover of around $70 billion this year, was not considering an initial public offering (IPO), Dunand said, but had many other options.
"We are not thinking about an IPO -- but that doesn't mean we don't have an open mind," Dunand told Reuters Energy and Climate Summit. "We are keen to consolidate our culture before we could think about changing it.
"Having said that, we have also been approached by potential investors -- sovereign funds and others -- who wish to make a private-equity type of investment in our company," Dunand said.
"These investors believe that commodities and commodity trading is important either for strategic reasons because it is a country with exposure to energy from either a producing or consuming point of view, or other types of investors who also have exposure to energy," he said.
Dunand declined to say which potential investors Mercuria was talking to or detail the scale of a possible investment, but said: "It might be like a private equity investment -- maybe 10 percent of the company, but (it is) too early to say now."
"We are at the very early stages of talking to people," he said. "We are just looking into it at the moment. There is no time frame."
Glencore, the world's largest diversified commodities trader, listed in London (GLEN.L) and Hong Kong last month, raising billions of dollars to finance its upstream activities including mining as well as potential acquisitions.
The move has raised expectations that other commodities traders, including Mercuria, might follow suit, securing cheap, long-term funding to underpin costly upstream infrastructure.
Dunand, who co-founded Mercuria in 2004, said the company had been investing between $200 million and $400 million per year in upstream production over the last 3-4 years, in a range of reserves including oil and coal and this would continue:
"I think we will stick on the same kind of path. It will be opportunity driven," he said.
He said he had been watching Glencore with interest to see what impact its listing had on the company.
Like pre-IPO Glencore, Mercuria is privately owned by its employees and has close to 100 equity holders with various percentages of shares, Dunand said.
"The logic behind an IPO would be a need to raise extra cash to invest in more activities. At the moment, we can finance it through our own balance sheet, or we can do it through joint ventures with others," Dunand said.
"Therefore we don't see the need to raise money from the market. I am not convinced that an IPO is the right model for our company," he said.
"So far we haven't yet wanted to raise capital to fund a particular project. If that situation comes, then we will have to look at what is the best way to address it. One answer maybe to form a partnership with others."
(Additional reporting by Dmitry Zhdannikov; editing by James Jukwey)