Commodity broker Marex eyes more takeovers after ED&F Man deal

·2 min read
FILE PHOTO: Traders work on the floor of the London Metal Exchange

By Eric Onstad

LONDON (Reuters) -Commodities broker Marex, which posted record profit in the first half, is looking for more takeovers to expand after agreeing to buy rival ED&F Man Capital Markets, the CEO said on Thursday.

London-based Marex, one of the world's largest privately-owned commodities brokers, announced the ED&F deal on Aug. 1, which a source close to the situation said was worth $220 million.

"We're certainly ambitious as a company and we see lots of opportunities to take market share and to grow. Acquisitions are one way we can accomplish that," Chief Executive Ian Lowitt told Reuters.

"We certainly don't have any view that ED&F is the end of the story."

The takeover, which is expected to be finalised by the end of the year, will give Marex opportunities to grow in fixed income and equities, which are larger and more liquid markets than commodities, Chief Financial Officer Paolo Tonucci said.

Tonucci said Marex would continue its issuance programme for senior debt to raise funds, without giving details. In June, the company issued $100 million of perpetual additional tier 1 contingent convertible notes.

Marex said in a statement adjusted pre-tax operating profit for the six months through June surged 70% to $59 million, on net revenue up 29% to $334.1 million.

The company said it was confident on the outlook for the full year despite turbulent markets and rising interest rates.

Commodities markets have fluctuated wildly this year as Russia's invasion of Ukraine sent many prices surging on fears of shortages, but in recent months they have fallen back on worries that a global recession would curb demand.

A campaign by central banks across the world to stamp out inflation by boosting interest rates has added to Marex's profits, since the broker holds billions of dollars in client cash that generates interest income.

Marex withdrew a planned initial public offering last year and Lowitt reiterated what he said in April about the firm still being interested in listing on the stock market.

"When the opportunity is right, we'll be able to bring a bigger and stronger firm to market," he said on Thursday.

Marex is majority owned by private equity firm JRJ Group and its partners Trilantic Europe and BXR Group, which bought stakes in the broker in 2010.

(Reporting by Eric Onstad; Editing by David Holmes and Elaine Hardcastle)