Glencore sells agri unit stake to fund

LONDON • Glencore agreed to sell just under a 10 per cent stake in its agriculture unit to Canada's British Columbia Investment Management Corp (BCIMC) for US$624.9 million (S$843.7 million) in cash as it continues to cut debt.

The commodities trader and miner, which sold a 40 per cent stake in the business to Canada Pension Plan Investment Board for US$2.5 billion in April, will retain a majority 50.01 per cent stake, it said in a statement on Wednesday. The agreement takes the value of disposals this year to US$3.2 billion, compared to its target for this year of US$4 billion to US$5 billion.

"These transactions highlight the superior value of Glencore Agri, with its advantaged asset footprint and business model, relative to its closest peers," Glencore chief executive officer Ivan Glasenberg said in the statement. The deal values Glencore Agri at US$6.25 billion, the statement said.

Glencore shares rose as much as 5.9 per cent in London after Bloomberg News first reported the sale on Wednesday. The sale is expected to close in the second half of the year.

Glencore has been selling assets and cutting costs under its programme to reduce net debt to as low as US$17 billion this year, compared with US$25.9 billion at the end of last year.

The company was in talks with potential investors from Qatar, Saudi Arabia and Canada to sell a further stake in the agriculture unit, people familiar with the matter said last month.

The business handles wheat, corn, barley, biofuels, cotton and sugar.

BCIMC, Canada's fourth-largest pension fund, has a history of investing alongside Canada Pension, including most recently as part of a consortium that aims to acquire Australian port and rail company Asciano for roughly A$9 billion (S$9.04 billion).

"Our investment in Glencore Agri provides an excellent opportunity for BCIMC to increase and diversify our exposure within the agricultural space, a sector we view as critical to supporting rising levels of global prosperity," Mr Lincoln Webb, a senior vice-president at BCIMC, said.


A version of this article appeared in the print edition of The Straits Times on June 10, 2016, with the headline 'Glencore sells agri unit stake to fund'. Print Edition | Subscribe