Commodity traders have a new trade: themselves.
A joint venture of Louis Dreyfus and a hedge fund owned by JPMorgan Chase announced plans on Wednesday to sell its energy trading business. A group of investors, including Paul Tudor Jones, Glenn Dubin and Timothy Barakett will buy the business, Louis Dreyfus Highbridge Energy. The terms of the deal were not disclosed.
The deal comes a day after the Carlyle Group agreed to take a 55 percent stake in Vermillion Asset Management, a commodities hedge fund with about $2.2 billion in assets.
Morgan Stanley is also reportedly in talks to sell a majority share of its commodities unit to the sovereign wealth fund Qatar Investment Authority, according to the Financial Times.
“We are excited to enter a new chapter of LDH Energy's growth and future development and appreciate the support and enthusiasm of our new investors,†William C. Reed II, the chief executive of Louis Dreyfus Highbridge Energy, said in a statement. “We believe that with their fresh perspective and vision for the company, the prospects for growth at LDH Energy are tremendous as it continues to expand its merchant footprint and grow its asset portfolio.â€
The companies are selling for different reasons.
The privately held Louis Dreyfus has been raising funds as it builds out its agriculture trading business. Morgan Stanley is moving in advance of new regulations that would limit its ability to trade for the bank's portfolio. And Carlyle is looking to diversify beyond its core private equity business.
Willkie Farr & Gallagher advised the JPMorgan affiliated fund, Highbridge Capital Management, while Cohen & Gresser worked with the joint venture Louis Dreyfus Highbridge Energy. The various investors worked with Bank of America Merrill Lynch and the law firms Davis Polk & Wardwell and Sullivan & Cromwell.
