(Reuters) - Global commodity trading powerhouse Louis Dreyfus is set to issue bonds for the first time and may publicly list a Brazilian subsidiary as it prepares to step up acquisitions amid quickening consolidation in the trading sector, the Financial Times quoted its CEO as saying on Sunday.
By tapping capital markets for the first time in its 160-year history, the closely-held company would partly follow in the footsteps of Glencore GLEN.N, which went public last year as the rising price of commodities and the need to fund expansion and investments strained its balance sheet.
The spending plan may also suggest that Dreyfus, which had in recent years explored potential mergers with several rivals, is now more determined to face the future on its own. Glencore bought Canada’s top grains handler Viterra earlier this year, and Japan’s Marubeni (8002.T) is the last bidder for U.S.-based Gavilon.
“We have a strong balance sheet, but we want to diversify our sources of capital,” Chief Executive Serge Schoen told the FT in a rare interview.
He said an initial public offering was one possibility for its LDC-SEV subsidiary, a sugarcane firm in which the firm has a 65 percent stake. The FT said its bond offering could be around $500 million in the next few months.
Schoen said the firm was planning to boost investments by 40 percent compared with the 2006-2011 period, and would “certainly make more acquisitions than we have in the past”. The FT estimated its spending plans at $7 billion. Talk of some kind of fundraising has circulated since last year.
Margarita Louis-Dreyfus said she ruled out a listing for the company, in which she holds a majority stake through a trust set up after the 2009 death of her husband, Robert Louis-Dreyfus. Her main goal is “to ensure the long-term survival of the company, and the name of the company”, the FT quoted her as saying.
Dreyfus, which along with ADM (ADM.N), Bunge (BG.N), and Cargill that make up the so-called ABCD club and have dominated the world’s food trade for decades, had after-tax profit of $735 million last year, down 30 percent from a record in 2010, the FT said. Sales were up 29 percent at $59.6 billion.
Reporting by Jonathan Leff; Editing by Marguerita Choy