Glencore has agreed to sell a 9.99 percent stake in its agricultural business to British Columbia Investment Management Corp (bcIMC) for US$624.9 million in cash, as it continues a push to sell up to US$5 billion worth of assets this year to help cut debt.
Glencore Agri would also take on US$3.6 billion in debt currently funded by Glencore, the Swiss-based mining and trading firm said, helping to pare debt on Glencore’s books. The debt would be financed without recourse to Glencore.
The deal follows the company’s sale of a 40 percent stake in Glencore Agri to Canada Pension Plan Investment Board for US$2.5 billion in April, and will leave Glencore with just over a 50 percent stake in the business, with existing management to stay.
“These transactions highlight the superior value of Glencore Agri, with its advantaged asset footprint and business model, relative to its closest peers,” Glencore Chief Executive Ivan Glasenberg said in a statement on Thursday.
The sale of the agricultural unit stakes plus an agreement to sell a gold deposit in Kazakhstan for US$100 million has put Glencore on track to reach its asset sales target as it seeks to cut net debt to between US$17 billion and US$18 billion this year.
Update: With a global portfolio of more than $123.6 billion, Victoria, British Columbia-based bcIMC has been ranked as one of the world’s largest private equity investors.
Along with the Glencore deal, the Canadian pension fund is partnering with Brookfield Asset Management in the US$6.8 billion buyout of Australian rail and port giant Asciano Ltd.
(Reporting by Sonali Paul; Editing by Richard Pullin)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Arnd Wiegmann