Trafigura fund seeks $1 bln for trade finance

Wed May 2, 2012 4:02pm EDT

* Targets include pension funds, private wealth

* Poaches three executives from BofA Merrill

By Emma Farge

May 2 (Reuters) - The fund arm of Swiss-based trading house Trafigura is seeking to raise $1 billion for trade and commodities finance, the company said on Wednesday, as it seeks to expand in a realm traditionally dominated by European banks.

The quest for new funding forms part of a broader drive by Trafigura's hedge fund Galena to increase its assets under management to $4 billion by the end of 2013.

Trafigura said it will target "liquidity rich but risk averse investors such as pension funds, insurance companies, corporate and family offices."

Trafigura also said that it has hired a team of three executives from Bank of America Merrill Lynch - Christoph Gugelmann, Stefano Sabbadini and Philip Jan Kok - as part of the trade finance expansion.

"By participating in the financing of commodity trading operations, investors will be able to monetise the value of liquidity in a market that, until recently, has only been open to banks," said Pierre Lorinet, chief financial officer at Trafigura.

"Notably this initiative will also provide distribution channels for those banks seeking to deleverage their balance sheets."

BofA Merrill declined to comment on the departures.

Trafigura created a commodities trade finance fund in the third quarter of 2010 which it says has returned 7.88 percent since its inception.

Since the fund's launch, French banks like BNP Paribas and Credit Agricole have retrenched in trade finance because of exposure to euro zone debt and difficulties in conforming with new rules.

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