Regions

Private equity firm Carlyle Group and other investors to purchase majority stake in metals trader

March 14
8:05 AM 2014

Carlyle Group, together with affiliates of Louis Bacon and the management of Traxys Group will be buying a controlling stake in Traxys, a metals trader, Reuters reported. Financial details of the acquisition were not revealed. Traxys is advised by Morgan Stanley which is set to be completed in the third quarter of this year after obtaining approvals from the regulatory authorities, the report said.

The stake in the metals trader will be bought by the US private equity firm and the other investors from Pegasus Capital Advisors, Kelso & Co and Resource Capital Funds. This is the most recent move of Carlyle Group in its bid to strengthen its position in the segment as big lenders reduce their holdings in physical commodities trading. As a result, private equity companies and trading houses are finding opportunities to acquire assets which allow them to strengthen their footprint in leading markets, the report said.

Tighter government regulations and lessened profits from the slowing of demand in China have led banks like JPMorgan, Morgan Stanley and Deutsche Bank AG to scale down on their investments in the commodities segment. China is the largest customer of copper, iron, rubber, cotton and other raw materials. However, increasing indications of a sluggish Chinese economy have caused prices of commodities to plunge. In December, Morgan Stanley divested most of its worldwide physical oil trading business to Rosneft, the state-run oil firm in Russia, the report said.

Citing a joint statement from the parties involved in the deal, the report said Traxys is a company that operates in the physical metals and minerals commodity, logistics and trading space. It's yearly turnover is pegged at over $6 billion, the report said.

Carlyle takes care of assets worth $189 billion. In October 2012, it also purchased Vermillion, a commodities-focused hedge fund, for an undisclosed amount. Louis Bacon founded and serves as the principal investment manager of Moore Capital Management, a New York-based firm which looks for opportunities in the worldwide financial and private equity markets, the report said.

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