RBS and Sempra Energy will form a joint venture in commodities. The joint venture will be called RBS Sempra Commodities.
RBS, through the joint venture, will acquire a majority shareholding in Sempra Commodities, Sempra’s successful commodities trading and marketing business, headquartered in Stamford, Connecticut, for a consideration of US$1.35bn. The transaction will have negligible impact on RBS Group’s capital ratios and will be immediately accretive to RBS’s earnings per share. The joint venture will be a significant expansion of the activities of RBS’s Global Banking & Markets Division (GBM) in this important asset class and provides excellent opportunities for further growth.
Johnny Cameron, director of RBS, says: “Over the past five years RBS has successfully built a first class global customer franchise in the areas of loans, bonds, fixed income and treasury risk management products, in our key markets of Europe, US and AsiaPacific. This joint venture brings leadership in a major asset class which will further complement that position. We are delighted that in forming this joint venture we will have more opportunities to meet the needs of our customers.”
Sempra Commodities is a leading player globally in the trading and marketing of commodities and the provision of risk management products associated with this sector.
In particular it is an established player in the US, one of the world’s largest energy markets and has an excellent knowledge of trading within the oil and gas sector. GBM is the leading project finance bank in the world and the leading lender to the renewable energy sector world wide. The joint venture brings together two partners with clear complementary strengths.
The joint venture will also enable RBS to take advantage of important environmental opportunities such as offering customers hedging for carbon and green certificate projects.
Donald Felsinger, chairman and CEO of Sempra Energy, adds: “Over the past nine years, we have grown Sempra Commodities to become one of the most successful companies in its sector. Today’s announcement establishing RBS Sempra Commodities will allow for faster international expansion of the commodities business into new markets, leveraging RBS’s strong presence in North America, Europe and Asia, and utilise its financial strength to establish a leadership position in the commodities sector on a global scale.”
RBS Sempra Commodities will be consolidated within RBS’s Global Banking & Markets. David Messer, president of Sempra Commodities, will become CEO of the joint venture, reporting to Jay Levine Head of GBM, North America and Peter Nielsen, head of treasury and investor products, GBM.
The transaction, which is expected to be completed by year-end, is subject to customary approvals by the UK Financial Services Authority, the US Federal Reserve Board, the Federal Energy Regulatory Commission and the Commodities Futures Trading Commission.