NEW YORK (Reuters) - Castleton Commodities has agreed to buy Morgan Stanley’s physical oil business, the biggest acquisition yet for the Stamford, Connecticut commodities trading house backed by hedge fund heavyweights.
The firm’s roots go back almost 20 years to its creation as the energy arm of Louis Dreyfus [LOUDR.UL]. Since 2013, after being sold to a private equity group that includes Paul Tudor Jones and Glenn Dubin, it has doubled in size to over 650 staff and entered new markets including iron ore and base metals.
Run by former Enron trader William C. Reed II, Castleton is best known for its legacy strength in power, natural gas and liquid gas market, but it has recently been expanding its footprint through a series of smaller deals, buying coal blending terminals and launching a metals desk.
Natural Gas Intelligence, an industry journal, ranked it as the 13th-largest natural gas trader in North America, handling 2.67 bcf per day in the fourth quarter last year.
The Morgan Stanley deal will vault it into the big leagues for oil trading, giving it, 45 oil storage leases for some 30 million barrels, as many as 200 staff from the biggest physical oil desk on Wall Street, and an unidentified number of oil supply and purchase agreements, according to CCI.
Here is a timeline of select key events in its history:
* Louis Dreyfus creates energy trading subsidiary
* Begins leasing storage and transport business for refined products, operating out of Houston, Montevideo Uruguay, Geneva Switzerland and Singapore
* Highbridge Capital Management, LLC makes a “significant minority equity investment” in Louis Dreyfus’s energy trading unit, creating Louis Dreyfus Highbridge Energy (LDH)
* Acquires the Cyrus River coal storage and blending terminal on the Big Sandy River in Kenova, West Virginia, with 5 million tons per year of storage and blending capacity
* Sells all its midstream assets to Energy Transfer Partners LP and Regency Energy Partners LP for $2 billion
* Begins freight trading and vessel operating business run out of Stamford, Geneva and Singapore
* Acquires the Slones branch coal terminal in Pike County, Kentucky where up to 3 million tons per year capacity
* Seals first power generation investments: Wichita Falls, Texas, cogeneration plant and Rensselaer cogeneration plant near Albany, New York
Since then, it has grown the portfolio and owns and operates of over 1,400 MWs of generation capacity located in Texas and New York
*On Dec. 31, management and a group of private investors including hedge fund heavyweights Paul Tudor Jones, Timothy Barakett and Glenn Dubin buy LDHE from Louis Dreyfus Group and a hedge fund owned by JPMorgan Chase & Co
Firm renamed Castleton Commodities International LLC
*Begins trading and marketing physical and financial iron ore in the United States, Asia and Latin America
*Buys the Paradox natural gas assets from Patara Oil & Gas LLC and sets up Denver office to oversee activities in Rocky Mountain region
*Buys Robinson’s Bend Field nat gas field in the Black Warrior Basin in Tuscaloosa County, Alabama, from Constellation Energy Partners LLC
*Buys Roseton power generating station north of New York City
*Buys Gulf Coast portfolio through multiple transactions, starting with the acquisition of Patara Oil & Gas LLC’s East Texas nat gas assets
*Acquires the San Juan gas processing plant Farmington, New Mexico and pipelines traversing Utah and New Mexico from Anadarko Petroleum Corp
*Launches global physical base metals trading business
Reporting by Josephine Mason; editing by Diane Craft