Abu Dhabi fund acquires 5% stake in Noble

News comes as embattled trader hunts for white knight investor

An Abu Dhabi fund has taken a 5 per cent stake in Noble Group, the embattled commodity trader searching for a white knight investor.

Goldilocks Investment bought 50.5 million shares in the Hong Kong-based commodity trader on Tuesday, according to a company filing on Thursday on the Singapore Exchange. The acquisition lifts Goldilocks' stake to 5.03 per cent from 1.18 per cent previously.

Goldilocks is controlled by investor Jassim Alseddiqi's Abu Dhabi Financial Group. It started the US$200 million (S$277 million) fund last year, saying it targets "undervalued opportunities" in the six Gulf Cooperation Council countries.

On Monday, it announced it had bought a stake in troubled United Arab Emirates-based energy group Dana Gas. The investment in Noble comes as the firm is searching for a strategic investor to restore confidence after a collapse in its shares and bonds this year.

Noble's shares have rallied 40 per cent this week after the company secured a US$2 billion loan extension of 120 days. The loan had been due to mature late this month. Yesterday, its shares ended 16.5 per cent higher at 53 cents after the disclosure, but they are still down 72 per cent from the start of the year.

Led by new chairman Paul Brough, a restructuring specialist who worked on the liquidation of Lehman Brothers, Noble has hired investment banks Morgan Stanley and Moelis & Co to review its options. The company's major shareholders include founder Richard Elman and China Investment Corp, the nation's sovereign wealth fund.

Noble remains under severe pressure after enduring several turbulent years marked by losses, credit rating downgrades and accusations of improper accounting. The company - once Asia's leading commodity trader - has seen its market capitalisation fall from over US$10 billion to less than US$500 million.

At Thursday's share price, Goldilocks' stake was worth about US$21 million.

IG Asia market strategist Jingyi Pan said that while Goldilocks' stake purchase would provide some confidence in Noble in the short term, the impact would be limited. "I see that investors could be invested in the near term because of the extension but, in the longer term, you have to depend on how (Noble's) restructuring and profitability would be."

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on June 24, 2017, with the headline 'Abu Dhabi fund acquires 5% stake in Noble'. Print Edition | Subscribe