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.
Michael Gelchie CEO – LDC
“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.
