Cargill’s $7.4bn hedge fund arm is to be broken up, amid a shake-up of some of the world’s largest commodity trading houses.
Black River Asset Management, an independently managaged subsidiary of the US trading house, will be restructured following a strategic review by its board, with three of five funds coming under employee ownership.
The Global Agriculture Absolute Return Fund will be folded back into Cargill’s risk management division, along with the Energy, Transportation & Metals fund.
The remaining three funds within Black River, covering fixed income, emerging markets equity, and private equity respectively, are perusing plans to spin-off into employee owned enterprises.
A spokesman for Cargill, which is a privately owned company, declined to give the financial details of the transaction.
“We will continue to be an investor, but we review our investments regularly,” she told Agrimoney.com, adding that plans are “still being formalised”.
The spokesman said that the shift to private ownership would help the firms “improve the alignment of interests” between investors and employees.
Black River already closed another four of its funds back in July, citing weak demand, returning more than $1bn to investors.
Falling commodity prices
The news comes as falling agricultural commodities prices force a shake-up of commodity-trading houses.
Last month, Cargill announced its first quarterly loss in 14 years.
Cargill cited costs related to an abandoned implementation of new business planning software, as currency effects from Venezuela, as it reported a loss of $51m in the three months to May 2015.
Commodities giant Glencore is reported to be in talks to sell a minority stake in its agricultural commodities arm.
Last month, Glencore reported that profits in the agricultural segment were down 46% in the first half of the year.
And this month Glencore issued $2.5bn of equities in a bid to settle concerns about the scale of its debts.
Shares in Glencore fell sharply on Monday, down nearly 30% on the day, as concerns gather about the scale of its debts, and the threat posed by low global metal prices.
Singapore-based trading house Noble has also been hit, losing 15% in Hong Kong traded shares on Tuesday.
Noble last year sold control of its agriculture division to a group of investors led by Cofco, the Chinese state-run crop trading giant.
(Source – http://www.agrimoney.com/news/cargill-to-break-up-hedge-fund-arm–8825.html)