Three of the largest commodity traders in the world said that their combined profit of $23bn last year shows they can continue to grow strongly without turning to public markets.
Jeffrey Dellapina said that there was “no way” Vitol would consider an IPO. Vitol is the largest independent oil trading company in the world.
He said: “I’m not the one who decides, but I am sure I can rally enough people to stop that from ever happening.” Vitol reported a annual income of $13bn for 2023. This was the second consecutive year of record earnings, following a $15.1bn profit in the previous year.
“We have been incredibly lucky in how the industry has performed. We don’t need capital. What would be the driving force at the end of it all?” he asked.
The majority of the largest commodity traders in the world are private companies. They play a crucial role in the sale and transportation of everything from metals to grains and oil around the globe. This raises concerns about the level of transparency in an industry which is the backbone of global economics.
Since Russia’s invasion of Ukraine on a large scale, traders have made huge profits off the volatility on the global markets. They claim they have never had such an easy time obtaining credit from banks and governments.
In 2022, Vitol Trafigura Mercuria will have a record-breaking profit of $25 billion. The combined profits of Vitol, Trafigura and Mercuria were second highest in 2018.
Guillaume Vermersch is the finance chief at Mercuria. He said that private ownership was “a powerful tool for retaining talent” because many employees owned shares in the company.
He said that there was no limit to the growth of Mercuria which, according to estimates, made $2.7bn last year. He added that the company was in a completely different position than Glencore which, in 2011, went public with the last major IPO of a commodity trading firm, making six of its senior partners billionaires.
“The Glencore situation probably needs to put in context. Vermersch said that they were on the verge of a major acquisition. It was a capital-intensive deal, and would require a large amount of capital over time to complete the Xstrata merge. “We’re not in the mining industry so our needs are different.”
Glencore reported a net profit of $3.8bn in 2010, the year it was listed. Its revenues were $145bn. Vitol posted $400bn of revenues last year, while Trafigura reported $244bn and a record profit of $7.4bn.
Christophe Salmon said that the trading industry has evolved since the days when trading houses had to find money to pay their major shareholders after they retired or moved away. “The company’s 1,200 shareholdings are very diverse. . . He said that the new generation is much more efficient than previous generations.
Salmon said that Trafigura, in addition to receiving significant support from lending institutions, had also “unlocked” an additional source of funding from export credit agencies. He said that Trafigura had raised $5 billion in total funding for medium-term projects.
Two of Trafigura’s longest-serving partners will also retire this year, including executive director Jose Maria Larroca, and former Chief Operating Officer Mike Wainwright.
Dellapina’s one-word response when asked if Vitol was having a harder time obtaining financing for oil trading, as more banks are focusing on their commitments to net zero, was “No.”
“This is an environment that must power itself. “I think the banks are aware of that,” he said.