Global merchant and processor of agricultural goods, Louis Dreyfus Co.(LDC), is in discussions to sell a stake in the firm to Abu Dhabi’s sovereign wealth fund ADQ.
The company under the administration of billionaire Margarita Louis-Dreyfus has managed to remain private for the past 169 years and will be now bringing external investors for the first time in its history due to its current difficult business circumstances.
In the current situation of the pandemic when the UAE is looking towards raising its food security, acquiring a minority stake in one of the four largest traders of grains, oilseeds and sugar would be a benefit to ADQ.
In 2019 Margarita Louis borrowed $1 billion from Credit Suisse to buy out minority shareholders of LDC and take its control. In the same year itself, the profits of LDC crashed on low prices due to the US-China war and the swine fever epidemic in China.
Last year the trading house was searching for equity investors as part of its expansion plans. But that move was hindered early this year when sovereign wealth funds, other trade houses and private equity investors gave up on valuation and the logic of taking a minority stake.
LDC is now looking for a successful deal that would provide much-required cash as shareholders are asking for financial assistance to pay down the loans.
ADQ, which was previously known as Abu Dhabi Development Holding Co. has a wide portfolio of acquiring commodities and agriculture sector based businesses.
The agri-food and industrial assets traders, the General Holdings Corporation PJSC (Senaat) and the Abu Dhabi-based multinational animal feed and essential food commodities firm, Al Dahra Holdings are two among its list.
A successful deal with LDC, which represents the ‘D’of the world’s largest agri-traders known as the ‘ABCDs’ would help the Emirati government to achieve its goal of food security.
Archer-Daniels-Midland Co., Bunge Ltd.and Cargill Inc. are the other members of ABCD.