Glencore is preparing to sell a minority stake in its agricultural business, according to a report by the Bloomberg business news agency.
The external investment could help the division to grow as the parent company struggles to reduce its debt. The Group has been badly hit by the global downturn in commodity values across its mining and energy businesses, with share price falling by over 80% since its takeover of the Xstrata metals business and 2011 stockmarket flotation.
Bloomberg says the sale is part of a debt-cutting programme instituted by Glencore chief executive Ivan Glasenberg to reduce company debt from $30 billion to $20 billion. Measures include selling $2.5 billion of new stock, asset sales, spending cuts and the dividend suspension.
Glencore’s Agriculture division reported adjusted earnings before interest and tax of $992 million on revenues of $25.82bn in the year ended December 31st 2014, compared to $192m and $30.04bn in the previous year. Agriculture represents around 10% of the company’s overall revenues from its mining and energy interests. The Group made a pre-tax profit of $4.2bn on sales of $221.07bn in 2014, up from a loss of $7.69bn and $232.69bn in the previous year.
Bloomberg states that Citigroup and Credit Suisse Group are advising Glencore on the Agriculture equity sale, which it says could value the whole division at as much as $12 billion. It adds that Glencore is discussing the move with “about a dozen sovereign wealth funds and Asia-based trading houses”.