Glencore plc (00805.HK) is in talks with a Saudi Arabian sovereign wealth fund, China’s state-backed grain trader COFCO and Canadian pension funds to sell a stake in its agricultural assets, Reuters reported, citing unnamed sources.
Selling assets is one prong of a wider strategy by the Swiss-based trader and miner to cut about a third of its US$30 billion in debt and regain investor trust.
Its shares have tumbled by about three-quarters this year to record lows in tandem with weak global commodity prices.
Last month, Glencore said it was hoping to raise US$2 billion from selling assets, including a minority stake in its agricultural assets, by early next year.
UBS analyst Myles Allsop has valued Glencore’s entire agriculture business at between US$10 billion and US$12 billion.
It was not clear which Saudi Arabian sovereign wealth fund was involved in the talks, but state-backed Saudi Agricultural and Livestock Investment Co. has been active in the sector, having entered a joint venture with US grain trader Bunge Ltd. to invest in Canadian grain handler CWB in April.
COFCO has also been expanding its agriculture activities, having invested US$2.8 billion in 2014 via joint ventures with Noble Group’s agribusiness and Dutch grain trader Nidera, after taking substantial stakes in the companies.
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