ADQ, Abu Dhabi’s largest holding company, has purchased a 45 percent share in Louis Dreyfus Company (LDC), a global merchant firm engaged in agriculture and food processing, marking the beginning of the firm’s 170-year history with the first non-family stakeholder.
The stake sale to ADQ was first disclosed in November last year. The deal’s total value was not disclosed, but LDC in a statement said that a portion of the fund was used to repay a $1.051 billion debt that LDC had granted to its parent company.
Earlier this year, ADQ has lined up a small group of banks for a loan of about $1 billion to back its acquisition of a 45 percent stake in commodities trader LDC including Emirates NBD, First Abu Dhabi Bank, Intesa Sanpaolo, and Natixis.
“This partnership with ADQ reinforces LDC’s position and financial strength to accelerate strategic investments including in new areas such as plant-based proteins, as well as in projects to move further downstream in several of our existing business lines.”
LDC’s financial difficulties in recent years have also been related to Biosev, a Brazilian sugar company previously controlled by LDC’s parent. LDC’s $1 billion debt to its parent, which is originally due in 2023, was part of a bailout for Biosev. This pressure has also been relieved when LDC’s holding company agreed to sell Biosev to Raizen, a Brazilian energy company, earlier this year.
During the coronavirus pandemic, a rise in commodities prices and high grain demand around the world especially from China boosted merchant earnings, enabling LDC’s profit to rebound last year.
The investment in LDC by state-owned ADQ begins a venture into food commodities, which are critical to Gulf as they are import-dependent. The agreement with LDC lays out a long-term supply agreement for agricultural goods to be sold to the UAE.