cryptocurrency stocks

Louis Dreyfus sells its stake in the Abu Dhabi sovereign wealth fund

The Russian heiress who controls the Louis Dreyfus company has agreed to sell a 45% stake in the agricultural trader to Abu Dhabi’s state-owned holding company ADQ, opening the business up to a non-family shareholder for the first time in 169 years of history. .

The deal provides a much-needed cash injection for the Geneva-based group as well as Margarita Louis-Dreyfus, who has taken in big dividends in recent years to repay the loans she has used. redeem other members of the Dreyfus clan.

The ADQ will buy Ms. Louis-Dreyfus a 45% stake in LDC’s parent company. In return, it will have seats on a supervisory board based on its shareholding, as well as other rights.

The sale price was not disclosed, but LDC said a portion of the proceeds, amounting to a minimum of $800 million, would be reinvested in the business. This will take the form of a loan repayment by LDC’s parent company.

“The transaction announced today is an important step in a decade-long strategy. . . which began with the consolidation of the shareholding of the parent company of LDC,” Ms. Louis-Dreyfus said in a press release on Wednesday.

LDC is part of a small group of companies, which includes ADM, Bunge and Cargill, which dominates global flows of agricultural products. It is one of the world’s largest traders of grains, soybeans, coffee and cotton, employing around 18,000 people. Its revenue in 2019 was $34 billion.

Ms. Louis-Dreyfus is the Russian-born widow of Robert Louis-Dreyfus, whose family founded the business in 1851. Since Robert’s death in 2009, she has steadily strengthened her grip on the business.

Efforts to find a strategic investor accelerated in 2019 after she spent almost a billion dollars to buy out the remaining family members and increase its stake in LDC’s parent company to 96%.

The search for a partner got off to a difficult start, with investors balking at valuation in a difficult context for the sector. The process was reignited in March and accelerated as agricultural commodity prices rebounded, particularly for grains and soybeans, as governments sought to bolster their state reserves after the pandemic.

China has also been an active buyer, particularly with the recovery of its pig herd after African swine fever hit production. This helped boost profits at LDC, where net income in the first half of 2020 reached $126 million, up from $71 million in the same period a year earlier.

At the same time, the global coronavirus pandemic has heightened concerns about security of supply among major food importers.

Gulf states, which rely heavily on overseas purchases, have sought to invest in food and agricultural businesses. ADQ, the emirate’s main public holding company, recently acquired a 50% stake in one of the region’s largest agribusinesses, Al Dahra.

“Food and agriculture is an attractive and central sector for the ADQ to generate financial returns,” said Mohamed Hassan Alsuwaidi, director general of the ADQ. “LDC will further accelerate the progress we have already made this year by significantly expanding ADQ’s food and agricultural portfolio.

ADQ has become one of Abu Dhabi’s busiest investment vehicles in recent years, keeping investment bankers busy with a range of operations.

Chaired by the UAE’s increasingly influential national security adviser, Sheikh Tahnoon bin Zayed Al Nahyan, the ADQ acts as an umbrella organization seeking to streamline the sprawling government sector, bankers say.

He owns most of Abu Dhabi’s interests outside of the capital’s established sovereign wealth funds and the national oil company, covering industry, logistics, healthcare, tourism, utilities and media.

The ADQ has redoubled the emirate’s focus on food security and logistics since the pandemic laid bare the need for Gulf states to build stronger supply chains.

As part of the agreement, LDC has signed a long-term supply agreement with ADQ for the sale of agricultural products in the UAE.

Jean-Francois Lambert, of Lambert Commodities, said the deal would help LDC in its transformation from a largely trade-focused business model into an integrated food company.

“Indirectly and above all, the fact that the main shareholder will have paid its debts means that LDC’s dividend policy will probably normalize. And last but not least, LDC will benefit from privileged access to the United Arab Emirates, a welcome gift for the company,” he said.

LDC has paid out just over $300 million in dividends this year, with Ms Louis-Dreyfus receiving the bulk of the profits.

Credit Suisse Group advised Louis Dreyfus on the transaction and Rothschild advised ADQ.