Marex Spectron Reportedly for Sale

Posted by Joseph Keefe June 11, 2015

Marex Spectron Group Ltd is up for sale, four years after the global energy and metals broker was formed from two different entities, four sources close to the company said.

The firm, which is majority-owned by private equity investment firm JRJ Group, emerged in 2011 from the merger of metals dealer Marex Financial and energy broker Spectron Group.

Sources said JRJ Group has considered selling Marex Spectron for some time. It has appointed an investment bank to follow the process, a source with direct knowledge of the matter said, but declined to name the bank.

"(JRJ) have looked at separating them out, and selling the proprietary trading separately, because the brokerage business, especially the commodities business, is profitable and fairly substantial," another source said.

Headquartered in London and also present in North America and Asia, Marex Spectron's main brokerage businesses are European agricultural products, energy, freight, base and precious metals.

It is one of the 11 firms trading on the open outcry floor of the London Metal Exchange (LME), part of the Hong Kong Exchanges and Clearing Ltd (HKEx).

JRJ, which focuses on mature companies in the financial services sector, took a controlling stake in Marex in 2010, before the 2011 acquisition of Spectron.

"Marex Spectron is owned substantially by private equity investors and speculation and rumours about the future ownership of the firm are not uncommon," Marex head of communications Richard Lindsay said.

"We would never comment on those rumours other than to say at a time when Marex Spectron has recently reported strong results, is consolidating dominant market positions in our core products and is growing rapidly in Asia and North America, speculation about our ownership is bound to be heightened."

Typically, private equity firms buy businesses, aiming to sell them after improving their performance.

Marex Spectron swung to a pretax profit of $22.6 million in 2014 from a $6.2 million loss a year earlier.

The company was advanced a working capital facility of $50 million from a group of banks last year. As at Dec. 31 it had drawn on $25 million, the only debt on its balance sheet.

The commodity brokerage arena has consolidated in recent years as heightened regulatory scrutiny, which caused an exodus of investment banks from the sector, and increased competition
slashed margins.

Jefferies sold most of its Bache unit's commodities and financial derivatives accounts to Societe Generale (SGE.SG), ADM Investor Services International Ltd (ADMISI) took over ICAP's base metals broking operations and Tullett Prebon bought oil broker PVM.