Home Commodities Top commodities traders dismiss IPO route after bumper profits

Top commodities traders dismiss IPO route after bumper profits


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Three of the world’s largest commodity traders said their $23bn in combined profits last year showed they could continue growing 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” that it would ever consider an initial public offering.

“I have a vote in it, not the deciding vote, but I’m sure I could rally enough people to kill any prospect of that ever happening,” he said. Vitol posted an annual profit of $13bn in 2023, the second year of bumper earnings after a record $15.1bn profit the year before.

“We are incredibly fortunate in terms of how well the industry has done. The fact is that we don’t have a capital need. So what would be the driver at the end of the day?” he added, at the FT’s 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 across the world, remain in private hands, feeding concerns about the transparency of an industry that is a backbone of the global economy.

But since Russia’s full-scale invasion of Ukraine, the traders have reaped huge profits from the volatility in global markets and say they have never enjoyed such easy access to credit lines from banks and governments.

Vitol, Trafigura and Mercuria posted record aggregate profits of $25.1bn in 2022. Last year marked the second-highest combined profit they generated.

Guillaume Vermersch, finance chief of Mercuria, said private ownership, with many employees owning shares in the company, was “a very powerful tool to attract and retain talent”.

He said there were no constraints on the growth of Mercuria, which made an estimated $2.7bn in profit last year, adding that it was in a different position to Glencore, which went public in 2011 in the last major IPO for a commodity trader, turning six of its senior partners into billionaires.

“The Glencore case probably needs to be put back in context. They were about to move into a major acquisition, very capital intensive, asking for a lot of long-term capital to develop the Xstrata merger,” said Vermersch. “We are not in this industry, so needs are different.”

In 2010, the year before it went public, Glencore’s net profit was $3.8bn on revenues of $145bn. Last year Vitol reported $400bn in revenues, while Trafigura posted $244bn in revenues and a record $7.4bn in profit.

Christophe Salmon, the outgoing finance chief of Trafigura, said the industry had now evolved from the days in which trading houses needed to find cash to pay out their major shareholders when they retired or left. “The company has a very diversified shareholding base of 1,200 . . . compared to the previous generation,” he said.

Salmon added that as well as significant support from lending banks, Trafigura had “unlocked” a new source of financing from export credit agencies. “We have raised approximately $5bn of total medium-term funding,” he said.

In addition to Salmon, two of Trafigura’s longest-serving partners, executive director Jose Maria Larroca and former chief operating officer Mike Wainwright, are retiring this year.

Asked if it was getting harder for Vitol to access financing specifically for oil trading as more banks start to focus on their net zero commitments, Dellapina had a one-word answer: “No.”

“This is a world that has to power itself. And, you know, I think banks do appreciate that,” he added.

This story was corrected to reflect that the combined profits generated by Vitol, Trafigura and Mercuria reached a record in 2022, not in 2023.

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