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Three of the world's largest commodities traders said their combined profits of $23 billion last year showed they can continue to grow strongly without having to turn to public markets.
Jeffrey Dellapina, chief financial officer of Vitol, the world's largest independent oil trader, said there was “no chance” the company would ever consider an IPO.
“I have a vote in it, not the deciding vote, but I'm sure I can rally enough people to eliminate any possibility of it ever happening,” he said. Vitol posted an annual profit of $13 billion in 2023, its second year of bumper earnings after a record profit of $15.1 billion the year before.
“We are incredibly fortunate in terms of how successful the industry has been. The reality is that we have no need for capital. So what will be the driver at the end of the day?” he added, at the Financial Times Commodities Summit in Lausanne.
Most of the world's largest commodity traders, who play a key role in selling and transporting everything from oil and gas to metals and grains around the world, remain in private hands, fueling concerns about the transparency of an industry that is the backbone of the world. Economy.
But since Russia's large-scale invasion of Ukraine, traders have reaped huge profits from volatility in global markets, and say they have never enjoyed such easy access to lines of credit from banks and governments.
Private equity, where many employees own shares in the company, was “a very powerful tool to attract and retain talent,” said Guillaume Vermeersch, Mercuria’s chief financial officer.
He said there were no restrictions on the growth of Mercuria, which made profits estimated at about $2.7 billion last year, adding that it was in a different position than Glencore, which went public in 2011 in the last major initial public offering for a commodity trading company, and turned six… Some of its major partners have become billionaires.
“The Glencore case may need to be re-contextualized. “They were about to go into a large acquisition, very capital-intensive, and they are asking for a lot of long-term capital to develop the Xstrata merger,” Vermeersch said. “We are not in that industry, so The needs are different.”
In 2010, the year before it went public, Glencore's net profit was $3.8 billion on revenue of $145 billion. Last year, Vitol reported revenues of $400 billion, while Trafigura reported revenues of $244 billion and record profits of $7.4 billion.
Christophe Salmon, Trafigura's outgoing CFO, said the industry had now evolved from the days when trading houses needed to find cash to pay major shareholders when they retired or left. “The company has a highly diversified shareholder base of 1,200… compared to the previous generation.”
In addition to the significant support provided by lending banks, Trafigura has “opened up” a new source of financing from export credit agencies, Salmon added. “We have raised approximately $5 billion in total medium-term financing,” he said.
In addition to Salmon, two of Trafigura's longest-serving partners, CEO Jose Maria Larroca and former Chief Operating Officer Mike Wainwright, will retire this year.
When asked if it would be difficult for Vitol to access funding specifically for oil trading as more banks start to focus on their net-zero liabilities, Dellapina had a one-word answer: “No.”
“This is a world that has to strengthen itself. You know, I think the banks appreciate that,” he added.
