September 12, 2018 / 2:49 PM / 2 months ago

Exclusive - China's Fosun in talks to buy commodity broker Marex Spectron: sources

LONDON (Reuters) - Chinese conglomerate Fosun International Ltd (0656.HK) is in discussions to buy British-based commodities broker Marex Spectron, two industry sources said.

FILE PHOTO: A company logo of Fosun International is seen at the Fosun Fair held alongside the annual general meeting of the Chinese conglomerate in Hong Kong, China May 28, 2015. REUTERS/Bobby Yip/File Photo

The deal to buy privately-owned Marex would expand the portfolio of Fosun, one of China’s most acquisitive overseas dealmakers, in both financial services and commodities, of which China is the world’s largest consumer and producer.

Fosun already owns iron ore, steel and oil companies.

Fosun declined to comment.

A spokesman for Marex said: “Marex Spectron is a profitable and successful business and such speculation isn’t new. We don’t comment on such rumours.”

The sources said discussions have been ongoing for several months, with an announcement expected before the end of September. The price was not immediately known.

Marex has been for sale for several years, sources said, as its private equity owners sought an exit from their investment. JRJ Group and its partners Trilantic Capital Partners and BXR Group bought a majority stake in the broker in 2010.

Marex, one of the world’s largest privately-owned brokers in the commodities sector, was formed from the merger in 2011 of metals dealer Marex Financial and energy broker Spectron Group.

Surging commodity volumes so far this year make this an good time to sell, industry sources said.

Several brokers have benefited from the volatility in industrial metals after U.S. sanctions were imposed on Russian producer Rusal (0486.HK), with average profits rising about 30 percent, London Metal Exchange (LME) members told a Reuters poll in June.

Marex is one of nine firms trading on the open outcry floor of the LME, owned by Hong Kong Exchanges and Clearing Ltd (0388.HK).

With two other LME ring-dealing firms owned by Chinese parents - GF Financial Markets and CCBI Metdist - the deal would mean that a third of the top-tier LME members are Chinese owned.

Marex Spectron posted pre-tax profit of $17.7 million last year, up 30 percent from $13.6 million in 2016. Revenue rose 5 percent to $199.1 million.

In July, S&P assigned a BBB- long-term credit rating and a “stable” outlook to the broker. In May, it increased its working capital facility to $125 million from a consortium of banks.

Headquartered in London and also present in North America and Asia, Marex Spectron’s main brokerage businesses are agricultural products, energy, base and precious metals.

Hong Kong-listed Fosun, co-founded by Chinese billionaire Guo Guangchang, has a sprawling portfolio that includes health, financial and leisure firms such as Club Med.

Its financial sector companies include Portugal’s largest insurance company Fidelidade, that country’s biggest listed bank Banco Comercial Português (BCP.LS) as well as German private bank Hauck & Aufhäuser.

Fosun’s portfolio also includes iron ore producer Haian Mining, the parent of Nanjing Iron & Steel (600282.SS) and Australian upstream energy firm Roc Oil.

Last month, Fosun posted a 17 percent rise in first-half net profit to 6.86 billion yuan. It has a market value of HK$112 billion.

Additional reporting by Julie Zhu in Hong Kong; Editing by Veronica Brown and David Evans

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