In the first week of the new year, press reports identified three leading bidders to buy the Royal Bank of Scotland's (RBS) 51% stake in a joint venture commodities trading operation with San Diego-based Sempra Energy. As reported by NGI late last year, Sempra has said it wants to remain in the lucrative trading space while refusing to comment on the potential deals (see NGI, Dec. 14, 2009).
A San Diego-based spokesperson again last Thursday refused to comment on the latest speculation.
A trio of bids in the $4 billion area have been cited, with the three leading bidders said to be Deutsche Bank, JPMorgan Chase and Australia-based Macquarie Group. The latter firm has been rapidly expanding its energy sector footprint in North America in recent years, including physical trading operations centered around major utilities in the Pacific Northwest and western Pennsylvania (see NGI, Feb. 9, 2009).
Investment bank Lazard Ltd is handling the potential sale for RBS, but it would not comment on reports that an announcement was only a few weeks away. A transaction is expected in late January or February, according to a Reuters report.
RBS originally paid $1.7 billion for its majority interest in the RBS Sempra Commodities joint venture when it was formed in April 2008 (see NGI, April 7, 2008).
The need for RBS to pull out of the joint venture was prompted in early November as part of its much larger restructuring with British and European Commission (EC) financial authorities. Initial reports that this move was imminent surfaced out of the United Kingdom early last November and Sempra issued a statement at that time to try to assure investors that any breakup would be orderly and could take several years.
Under the terms of the joint venture, Sempra can veto any potential sale and has the first rights to buy back the bank's interest in the trading operation. "It is a business we know and understand, it is highly profitable, and we are committed to stay in it longer term," Sempra CEO Donald Felsinger said in November, characterizing the commodities trading unit as a "valuable franchise."
In the ongoing effort to replace the bank's share of the joint venture, Felsinger has said that "everything is on the table."
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