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Tuesday, December 6, 2016

Blackstone Unlikely to Enter Commodities Trade

April 17, 2014

Blackstone exec doesn't expect move into commodities in near term

Blackstone Group LP is unlikely to make a foray into commodity trading in the short term as the world's largest alternative asset manager struggles to find a target to fit its asset-light business model, a senior executive said on Thursday.

In his first earnings call with reporters since Blackstone lost out to Mercuria to buy JPMorgan Chase & Co's physical commodity division, Blackstone President Tony James said he is still interested in broadening the company's revenue through commodities.

"It remains of interest, but I would not count on us doing anything in the short term," he said. James did not identify any potential targets.

Instead, he reiterated a stance outlined in the company's January results call that the potentially risky, capital-intensive business of trading physical commodities may be at odds with Blackstone's business model.

"The constrains are we don't really want to become a proprietary asset-heavy firm on the one hand," he said.

"On the other hand, just being a trading business without the physical side, I think you'd miss something there because you don't have the insight of being in the physical business which I think is important for being consistently successful in commodities."

Those concerns are similar to those that have plagued Wall Street banks in recent years. Morgan Stanley (MS) and others are retreating from the space due to tighter regulation.

(Reporting by Josephine Mason)



 
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