March 14 Carlyle Group, along with other
investors, has agreed to acquire a majority stake in metals
trader Traxys Group, in the latest move by the U.S. private
equity firm to boost its presence in commodities as big banks
Carlyle will buy the stake along with affiliates of investor
Louis Bacon and Traxys management for an undisclosed sum from
private equity firm Pegasus Capital Advisors, Kelso & Co and
Resource Capital Funds.
The acquisition comes at a time when large banks such as
JPMorgan, Morgan Stanley and Deutsche Bank AG
are pulling the plug on physical commodities trading
amid increasing government scrutiny and dwindling margins as
demand from top importer China slows.
This is opening up opportunities for trading houses and
private equity firms to snap up established assets that offer
them a quick foothold in top markets.
Morgan Stanley sold the majority of its global physical oil
trading operations to Russian state-run oil major Rosneft
Traxys is a physical metals and minerals commodity merchant,
logistics and trading firm with annual turnover of more than $6
billion, according to the joint statement from the companies.
Louis Bacon is the founder and principal investment manager
of New York-headquartered Moore Capital Management which
invests in global financial markets and private equity markets.
Carlyle, which manages $189 billion in assets, acquired
commodities hedge fund Vermillion in October 2012 for an
But assets at Vermillion more than halved to around $900
million in the nine months to December, suggesting investor
redemptions at the fund after some negative returns.
Commodities as an asset class has suffered from falling
prices amid growing signs of an economic slowdown in China, the
biggest buyer of most raw materials from copper and iron ore to
rubber and cotton.
Chinese Premier Li Keqiang on Thursday hinted at some
tolerance for slower economic expansion this year to push
reforms aimed at providing longer-term and more sustainable
Morgan Stanley was the financial adviser to Traxys
for the deal which is expected to close in the third quarter
subject to regulatory approvals.