Swiss trading house Mercuria Energy Group Limited announced on Friday that it had completed the purchase of JPMorgan Chase & Co’s physical commodities unit, following the signing of a definitive purchase and sale agreement in March, but at $800 million and not the original value of $3.5 billion.
JPMorgan paid RBS almost $2 billion in 2010 for the main part of its commodities business.
Chief Executive Officer of Mercuria, Marco Dunand, said:
“When we founded Mercuria 10 years ago, it was our goal to develop a global energy-focused commodities group. This acquisition helps to bring that vision to reality by building upon our physical power, gas and oil operations in North America and by adding to our client base. J.P. Morgan’s talented professionals and physical assets in the power and gas markets are highly complementary to the group’s existing activities and assets.”
JPMorgan staff who transfer to Mercuria will work in its offices in Houston, Singapore, Greenwich (Connecticut), Calgary and London.
Mercuria is one of the 5 largest independent energy traders & asset operators worldwide.
Mercuria acquires Henry Bath
As part of the takeover, Mercuria also acquires the historic metals warehousing, storage and handling business Henry Bath, which will operate as a stand-alone subsidiary.
Mr. Dunand said:
“This highly complex transaction has been made possible by building Mercuria’s management team over recent years. By adding individuals like Magid Shenouda as Global Head of Trading and Shameek Konar as Chief Investment Officer, and other highly competent professionals, we are effectively scaling the Mercuria model with the completion of this acquisition. This enables us to further extend the range of services we offer to our clients and counterparties while balancing our global position.”
Following increased regulatory and political pressure, JPMorgan decided to get rid of its multibillion-dollar physical commodities unit in 2013. The US bank says it wants to concentrate on lending.
However, in a statement, JPMorgan said:
“JP Morgan will continue to be an active participant in the commodities markets, providing traditional banking activities including: financing, derivatives, LME warrant trading, the vaulting and trading of precious metals, liquidity and risk management, and offering advice to global companies and institutions.”
As major banks move away from commodities trading over the last 24 months, private trading houses have benefited enormously.
About Mercuria Energy Group Limited
Based in Geneva, Switzerland, Mercuria is a rapidly-growing energy and commodity group with a turnover in 2013 of $112 billion. It is one of the five biggest independent energy traders and asset operators globally.
Mercuria moves approximately 1.5 million barrels of crude and oil products each day. It has assets in the US, Canada, Europe, China and Argentina. The company also has investments in bio fuels plants and the coal mining industry.
Its primary competitors are the Noble Group, Glencore, Trafigura, Vitol and Cargill.
The firm focuses mainly on energy and is present along the whole commodity value chain. It employs more than 1,000 people and operates in offices across the globe in 28 offices.
Mercuria was founded in 2004 by Marco Dunand and Daniel Jaeggi.