Three huge commodities groups have revealed they have no intention of going public due to plentiful financing options.
Charterers Vitol, Trafigura and Mercuria, which also own ships, told the FT’s Commodities Summit in Switzerland that there is just no need to carry out IPOs to list their shares.
The group is reported to have made a combined profit of $23bn for 2023 in volatile markets, and funding has not proved a problem.
Jeffrey Dellapina, chief financial officer of Vitol, told the conference there was “no chance” the group would ever considering floating.
“I have a vote in it, not the deciding vote, but I’m sure I could rally enough people to kill any prospect of that ever happening,” he said.
“We are incredibly fortunate in terms of how well the industry has done. The fact is that we don’t have a capital need. So what would be the driver at the end of the day?”
Most of the world’s biggest trading groups are still private. Glencore carried out the last such IPO in London in 2011.
Guillaume Vermersch, chief financial officer at Mercuria, said staying private is a powerful tool to attract and retain talent, because many staff have shares.
Bloomberg cited sources this week as saying that the Swiss company made $2.7bn in earnings for 2023.
New sources of cash
Vermersch said his group has no barriers to growth.
“The Glencore case probably needs to be put back in context. They were about to move into a major acquisition, very capital-intensive, asking for a lot of long-term capital to develop the [mining company] Xstrata merger,” he added.
“We are not in this industry, so needs are different.”
Christophe Salmon, who is retiring as finance boss at Trafigura, explained how the sector has changed.
In the past, traders needed to find cash to pay out to major shareholders when they left; now Trafigura has a larger shareholder base of 1,200.
New sources of finance lessen the need to access capital markets. Export credit agencies are now playing an important funding role, he said.
And despite banks focusing on decarbonising their portfolios, Dellapina said it has not become more difficult to fix loans for oil trading.
“This is a world that has to power itself. And, you know, I think banks do appreciate that,” he added.
