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Exclusive-State-backed Chinese fund buys stake in energy trader Mercuria

FILE PHOTO: A flag with the logo of Mercuria commodity trading house is pictured in Geneva

By Julia Payne

LONDON (Reuters) - A subsidiary of China's CNIC Corp has bought a minority stake in Swiss-based global energy trader Mercuria, sources familiar with the matter said.

China has hired dozens of traders from global firms to work for its state commodities companies as it expanded in sectors ranging from oil to metals and grains but there have been few direct purchases into international trading houses by Chinese firms.

The country has been looking to hedge its global interests against possible future Western sanctions since relations with the United States deteriorated during Donald Trump's presidency. China's top oil producer CNOOC was in 2022 preparing to sell its stakes in assets in Britain, Canada and the United States.

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The CNIC subsidiary bought the stake of just under 5% in Mercuria last year, the sources said.

The purchase has not previously been made public. The sources did not disclose the value of the transaction.

Mercuria had an equity value of about $4.4 billion in 2021, based on financial information on its website, which would make the stake worth at least $220 million.

CNIC did not respond to requests for comment. Mercuria declined to comment on the record for this story.

The purchase came in the fourth quarter last year after China's refining and petrochemical company ChemChina sold back a 12% stake it had held in Mercuria for six years.

CNIC, set up a decade ago, is a state-backed investment fund. The unit that bought into Mercuria is focused on China's energy transition and provides a foothold for Mercuria in the country as the Geneva-based trader seeks to expand its presence in clean energy sources.

Mercuria pledged in 2020 that 50% of its new investments would go into renewable energy for the next five years and it teamed up with U.S. private equity firms to set up a $1.5 billion fund for clean energy such as solar power.

Mercuria in December hired Robert Lawson as executive vice president from BP where he was a driving force in the major's shift away from oil and gas.

Founded in 2004, Mercuria is among the top five global oil traders, moving around two million barrels per day of crude oil and refined products.

The bulk of the company's traded volumes is now non-oil. It is a major trader of power, natural gas, and emissions and reported a record annual net profit in 2021 of $1.3 billion and revenues of $130 billion, according to the latest available results.

Mercuria CEO Marco Dunand, President Daniel Jaeggi and global head of trading Magid Shenouda are the firm's biggest shareholders. Their combined stakes fluctuate at around 40%.

(Reporting by Julia Payne, additional reporting by Chen Aizhu in Singapore. Editing by Jane Merriman)