London — Commodities trader Trafigura has fully bought out the family stake of its late founder Claude Dauphin after record earnings in 2020, boosted by pandemic-related volatility and a consolidating sector, its chief financial officer told Reuters.
“The Dauphin family stake has been fully reimbursed,” CFO Christophe Salmon said. As Ivan Glasenberg, in an unrelated move, prepares to step down as Glencore CEO, the buyout marks the end of the trading world’s ties to the Marc Rich era.
Dauphin, who founded Trafigura with partners in 1993, had been one of Rich’s key lieutenants, along with Glasenberg, who has led Glencore for nearly 20 years.
Rich, a pioneer of modern oil trading, was a controversial figure, famously pardoned by former U.S. President Bill Clinton on charges of tax evasion.
With the reimbursement complete, Trafigura has increased the number of its senior employee shareholders to 850 from 700.
Dividends this year rose to $586 million compared with a lower-than-usual $337 million in 2019. Last year, the firm decided to cut payouts to boost equity and reduce its adjusted debt to equity ratio.
On top of the extreme market volatility caused by the COVID-19 pandemic, Trafigura’s results were further boosted by falling competition from other firms. Sector consolidation accelerated in the shipping fuels market, known as bunkering.
“Small and mid-sized traders left the sector due to bankruptcy or a lack of access to financing,” Salmon said.
“The bunker market in Singapore, the world’s largest… is very different from a year ago. The main players are Trafigura, Vitol and Mercuria, and not the regional ones any more.”
The sector has seen major defaults this year, particularly in Asia, as a sharp economic downturn due to coronavirus hit vulnerable companies and laid bare fraud.
Salmon said an initial public offering of part of the firm was not on the cards. He said the company would sell some assets next year, and was working towards completing the purchase of a stake in Russia’s Vostok Oil project in the Arctic.
Last month, Russian state-owned oil firm Rosneft approved the sale of 10% of capital in the project.
Salmon said the reserves were comparable to the United States’ prolific Permian basin.
In Congo Republic, Salmon said negotiations to restructure a major oil prepayment deal, key to the country’s bid to unlock more cash from the International Monetary Fund, were “progressing very well”.
Salmon said the firm was last month allocated its first repayment cargo by the Congolese state oil firm since early this year.
The sale of Angolan state oil firm Sonangol’s 30% stake in Puma Energy, Trafigura’s midstream and retail arm, was ongoing, he added, after it hired Jefferies bank to run the deal. Puma has hired ING to look at further divestments.
Puma has been loss-making since 2018 and was a sizeable impairment for the trader in 2020.
(Reporting by Julia Payne and Dmitry Zhdannikov; Editing by Louise Heavens and Jan Harvey)