LAUSANNE, Switzerland Private partnerships still offer the best route to growth and development for most commodity traders, feeding the personal touch which sustains business, despite the success of Glencore's share flotation last year, senior traders said on Tuesday.
Glencore (GLEN.L) raised more than $10 billion via an initial public offering last May, making six of its directors billionaires including Chief Executive Ivan Glasenberg, but so far its rivals have not followed suit.
"We continue to think that a partnership is the best way to grow our business," Ian Taylor, President and Chief Executive of energy trader Vitol, told a commodities conference. "We don't expect Vitol to go for a public share offering in Glencore's footsteps."
Paul Chivers, group Chief Investment Officer of Mercuria Energy, another of the world's top five energy traders, agreed:
"That is true for Mercuria as well," Chivers said.
"We are at a different part of our evolution to Glencore."
A public share offering gives access to long-term, inexpensive capital, but it also means more scrutiny for trading companies operating in a world with a reputation for secrecy and deals done behind closed doors.
Vitol's Taylor saw new opportunities for private traders to tap private equity funds for capital as traders increasingly sought physical assets such as oil refineries and storage facilities.
Taylor said in an interview in February his firm was a potential buyer of two refining assets in Britain and Germany.
Alex Beard, head of oil at Glencore, told the conference Glencore's decision to go public was based on its need for capital in a market that had become increasingly capital intensive.
"We felt that if we were going to realise the full potential for our business ... there was no alternative."
Glencore, already a major producer of commodities including copper and zinc, became an oil producer late last year with its Aseng field in Equatorial Guinea, and has signalled interest in making further acquisitions.
Beard said the culture at Glencore had not changed markedly since flotation last year.
"The way Glencore operates now is pretty much the same as it was before the deal," Beard said.
Vitol's Taylor suggested some traders would not welcome the heavier requirements for disclosure or the amount of effort needed to treat all shareholders fairly.
"We don't (now) have to spend huge amounts of time with external shareholders, or with journalists," Taylor said.
Vitol, the world's largest private energy trader which says it trades about 6 million barrels of oil equivalent every day, has 360 partners, including many of its key personnel.
Mercuria has also said it believes a private partnership offers engagement and motivation to its employees, many of whom hold stakes.
(Reporting by Christopher Johnson and Emma Farge; editing by Keiron Henderson)
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