Mercuria Energy Group Ltd. head trader and one-time heir apparent Magid Shenouda has sharply reduced his equity stake, suggesting a possible shift in relationship with the other two men who control one of the world’s biggest energy traders.
(Bloomberg) — Mercuria Energy Group Ltd. head trader and one-time heir apparent Magid Shenouda has sharply reduced his equity stake, suggesting a possible shift in relationship with the other two men who control one of the world’s biggest energy traders.
Shenouda, who joined Mercuria in 2014, had for years been seen as the likely successor to co-founders Marco Dunand and Daniel Jaeggi. The three former Goldman Sachs Group Inc. executives together own a controlling stake in Mercuria through a Guernsey entity called MDJ Oil Trading Ltd.
Mercuria is one of a handful of trading houses that dominate energy markets, putting it at the center of a global rush for resources since Russia’s invasion of Ukraine. Shenouda has reduced his stake at time when Mercuria and its rivals are churning out spectacular profits for their shareholders thanks to the disruptions wrought first by the pandemic, and then the war.
But the change also highlights a broader succession dilemma facing some of the top commodity traders, where ownership is concentrated in the hands of a few top executives who have been running their companies for many years or decades.
Shenouda has always had a smaller stake in the company than Dunand and Jaeggi, who built what had been a niche business focused on Russian crude into a global trader.
Yet since 2021, his economic interest in Mercuria’s parent company held via MDJ Oil Trading has fallen by 89%, according to corporate filings.
It’s not clear why Shenouda has reduced his equity stake. A person familiar with the company’s thinking said that he remained committed to Mercuria as its head of trading and deputy chief executive officer. Shenouda had effectively sold his shares back to the company, the person said.
ChemChina Stake
The reduction comes amid a broader reshuffling of Mercuria’s investors. The company had previously courted ChemChina as a strategic shareholder, but last year the trading house bought back a 12% stake held by the Chinese state-owned company.
That transaction resulted in Dunand and Jaeggi increasing their shareholding, the person familiar with the company’s thinking said.
Chinese state-backed fund CNIC Corp. also bought a stake of just under 5% in Mercuria in the fourth quarter of last year, said the person.
Mercuria, which was founded in 2004, first publicly disclosed details of its ownership structure in filings in 2018. They stated that Dunand, Jaeggi and Shenouda control the company through MDJ Partnership, an unregistered Guernsey partnership that in turn owns MDJ Oil Trading. At that time, MDJ Oil Trading’s stake in Mercuria’s British Virgin Islands holding company was 41%, but it has increased since then.
Filings show that while Dunand and Jaeggi’s stakes in Mercuria’s holding company increased, Shenouda’s decreased sharply between mid-2021 and the end of last year.
The changes have come at a time of windfall earnings for the commodity trading industry. In 2021, the last year for which accounts are available, Mercuria made record profits of $1.25 billion and declared dividends of $521 million — suggesting that Dunand and Jaeggi may have received a payout of around $100 million each. Dunand earlier told Bloomberg in an interview that the company’s profits for 2022 would probably exceed 2021’s levels.
Meanwhile, the trading house has been making senior hires from outside its ranks. For example, last year it hired BP Plc’s former top in-house dealmaker, Robert Lawson, as head of mergers and acquisitions.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.