NEWSMAKER-JPM deal propels Mercuria to elite club of commodity titans

Wed Mar 19, 2014 11:39am EDT
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By Dmitry Zhdannikov and David Sheppard

NEW YORK/LONDON, March 19 (Reuters) - The big three just became the big four.

Mercuria's purchase of JPMorgan's physical commodities business marks the culmination of a 10-year journey for Swiss traders Marco Dunand and Daniel Jaeggi, two men who transformed a small trading house into an operation to rival the biggest in the natural resources business.

Dunand and Jaeggi started Mercuria in 2004 when they took a stake in Poland-focused trade house J+S, but buying the largest oil and metals trader on Wall Street for $3.5 billion catapults them into the elite club of global commodity titans, alongside Glencore Xstrata, Vitol and Trafigura.

Dunand said on Wednesday he and Jaeggi's combined 60-plus years of trading experience, starting at agricultural dealer Cargill before rising through the ranks at storied commodity firms such as Goldman Sachs' J.Aron operation and oil-trader Phibro, had prepared them for the challenge.

"I could of course tell you that I want to be the king of the world but the reality is we are changing to adapt," Dunand told Reuters. "We want to be fast growing in an ever changing world. Our model is very much between a traditional trading company and a bank."

Few would rule out further expansion.

Mercuria, named after the Roman god of trade, was growing rapidly even before the JPMorgan purchase. Turnover in 2013 was above $100 billion for the first time, with profit estimated at over $400 million. The firm's current 700-strong headcount will likely expand markedly after the JPMorgan purchase. The bank's physical commodity division currently employs around 600 people, including traders and commercial operators

The total value of the deal was $3.5 billion, JPMorgan said in a statement, slightly higher than the $3.3 billion the bank valued its physical operations in an early prospectus, according to industry sources. The all-cash deal is expected to conclude in the third quarter this year.   Continued...