LONDON, May 21 (Reuters) – Former top commodities traders from Deutsche Bank are in talks with U.S. private equity group Riverstone to set up a $0.5-1.0 billion venture that will both invest and trade in commodities.
The venture, which will put money into assets ranging from energy producers to pipelines and refineries, is a rare foray by a private equity firm into commodities at a time when banks are curbing exposure due to tighter regulations and stagnant prices.
Riverstone, an energy and power-focused private investment firm with around $24 billion of capital raised across seven investment funds, will hold a controlling stake in the venture, TrailStone, to be launched later this year.
David Silbert, who led Deutsche’s commodities trading team from 2007 before leaving last year as the bank reduced exposure to commodities, will also be investing in TrailStone together with his partners, Silbert told Reuters.
“TrailStone will be an asset-backed commodities merchant. We will buy refineries and production assets, create joint ventures with people who have assets,” Silbert said.
“There are loads of upstream producers who need capital. We will be telling them – pay us back in production not cash.”
Riverstone declined to comment on the investment.