Trading houses face mounting pressure to go public-execs

Tue Apr 16, 2013 10:50am EDT
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By Emma Farge and Christopher Johnson

LAUSANNE, Switzerland, April 16 (Reuters) - Privately held commodity merchants will face mounting pressure to list shares as they compete for capital to fuel their expansion beyond trading, senior executives said on Tuesday.

Glencore raised more than $10 billion via an initial public offering in 2011, although major rivals such as Vitol and Mercuria have so far not followed suit.

But that could change as competition heats up among top players to buy assets and increase control of supply chains in the face of slim profit margins.

"I'm not sure that in the next phase, the next five years, we can necessarily stay private. It depends on the access to capital," Serge Schoen, chief executive officer of private trading house Louis Dreyfus said at the FT Global Commodities Summit.

Bunge's chairman and chief executive Alberto Weisser said the quickening pace of consolidation would heap further pressure on private firms to list.

"I believe that we will see some more companies going public because we have seen that it is necessary to be very large and probably even larger. There needs to probably be even more consolidation," Weisser told the conference.

Yusuf Alireza, CEO of Noble Group, said the need to access new forms of capital would only increase in coming years due to banking regulations.

For example, the so-called "Basel III" regulations - to be phased in from next year - require higher levels of capital and reserves at banks, which will make commodities lending more expensive.   Continued...