Goldilocks raises stake in Noble Group to 8.19% from 5.03%

SINGAPORE (BLOOMBERG) - Noble Group's newest major shareholder, Goldilocks Investment Co, has raised its holding in the embattled commodity trader and now controls almost as much equity in the company as China's sovereign wealth fund.

The Abu Dhabi fund increased its stake to 8.19 per cent from 5.03 per cent after adding 41.6 million shares on July 6, according to a filing to the Singapore Exchange on Monday (July 10). That makes it the fifth-largest shareholder after China Investment Corp, which has a 9.61 per cent holding, according to data compiled by Bloomberg.

The stock rose 3.2 per cent to 64.5 Singapore cents by 10.15am on Tuesday.

Noble Group is seeking a strategic investor to restore confidence after a collapse in its securities and Goldilocks' move follows an agreement between the company and its banks to extend a US$2-billion (S$2.8-billion) credit facility - albeit just for 120 days - allaying immediate concerns Noble could default. Goldilocks, which is controlled by investor Jassim Alseddiqi's Abu Dhabi Financial Group, first disclosed a major stake on June 22.

Abu Dhabi Financial Group's media representatives did not respond to requests for comments made after usual business hours.  While the stock has rallied more than 40 per cent since then, it is still down over 60 per cent for the year. The company, once Asia's largest commodity trader, has endured several turbulent years marked by losses, credit-rating downgrades and accusations of improper accounting that it has denied.

"There's always a price that somebody will see value and perhaps they have," said Mr Nicholas Teo, a trading strategist at KGI Securities (Singapore), by phone. "Is it strategic? We will only see as they continue to accumulate."

Even after the reprieve on credit, Noble Group remains under the gun. Fitch Ratings has said it does not expect a meaningful recovery in the trader's ability to generate profit this year, while the risk of default has not gone away, according to a Goldman Sachs Group note on July 7, which cited earnings uncertainty and cash-flow pressure.