Trading firm Noble Group said on Tuesday that Chinese sovereign wealth fund CIC bought a 14.5 percent stake in the firm for $850 million, giving China more exposure to global commodities markets.
The deal follows on from a cooperation pact between CIC and commodity trader Glencore, as China pursues resource firms to give it trading leverage and access to the raw materials needed to feed its economy.
Noble is the only major global commodity trading house with a public listing, compared to privately-held but bigger rivals such as Glencore, in which sources said CIC has concluded a cooperation agreement.
Noble said in a statement it had agreed to sell 573 million shares to China Investment Corporation at S$2.1137 per share, an 8 percent discount to its last traded share price of S$2.30.
The placement consists of 438,000,000 newly issued shares by Singapore-listed Noble and 135,000,000 shares from trusts associated with the interests of Noble founder and CEO Richard Elman, Noble said.
"The newly issued shares will provide the Noble Group with additional capital to pursue strategic investments in key agricultural markets globally," Noble said in the statement.
Noble's shares have been halted for the past week, when it said it was in talks with an unidentified investor for a major stake.
The deal gives CIC exposure to a mix of Noble's hard assets and trading acumen, and shows big emerging market governments and state companies are pursuing resource firms that give them trading leverage in global markets as well as access to the raw materials they need to feed their economies.
The small direct stake by CIC in Noble means the wealth fund is likely to play a hands-off role in the running of its business, while maintaining a role as financial investor. But the pact with Glencore will help CIC get more deeply into commodities trading, industry watchers and analysts say.
The placement is subject to approval of the respective boards of directors of Noble Group and CIC and final legal documentation.
Shares Have Doubled
Merrill Lynch acted as placement agent to Noble and JPMorgan advised CIC.
Founded by Richard Elman in 1987 with $100,000 in savings, Hong Kong-based Noble has expanded into a global empire that includes operations from sugar and ethanol in Brazil, soy crushing facilities in China and coal mines in Australia.
Noble has more than 100 offices in over 40 countries across five continents. It has more than 4,000 customers worldwide and employs about 4,800 people.
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