ED&F Man float will make brokers rich: About 20% of old-established commodities trader to be sold in placing and public offer

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The Independent Online
FIFTY commodity brokers will become millionaires when ED&F Man, the London-based trader, floats on the Stock Exchange later this month. About 20 per cent of the company is to be sold in a placing and public offer.

Directors and senior managers who currently own 90 per cent of the firm include Michael Stone, the non-executive chairman, who has 8 per cent. Man's market capitalisation will be between pounds 450m and pounds 500m, valuing his holding at pounds 38m. Harvey McGrath, managing director, and Stanley Fink, finance director, own about 3 per cent and are set to realise paper fortunes of pounds 15m each.

There are 130 directors, managers and employees who own shares and according to Mr McGrath all would be retaining at least 85 per cent of their holdings.

Mr McGrath said that many employee shareholders borrowed money to buy their stakes and will use cash proceeds from the flotation to pay off personal debts.

ED&F Man is hoping to raise a further pounds 90m to reduce debt and fund future expansion of the business. Mr McGrath said the company would expand by acquisition and by investing in new capital equipment for existing operations.

It has been trading commodities since 1783, when James Man started broking sugar imports, which in turn led into rum making. ED&F Man used to supply the Royal Navy's rum rations until David Owen, then under-secretary of state for defence with responsibility for the Royal Navy, stopped the practice in 1970. It operated as a partnership until 1970, when it converted to a company.

As well as sugar it deals in cocoa, molasses, coffee, edible nuts and spices. It numbers Coca-Cola, Nestle and Mars as leading customers.

As a commodity broker, ED&F Man is an operator on Liffe, the London financial futures and options exchange. It also manages commodities funds and has pounds 700m under its control.

Profits have grown from pounds 38m in 1990 to pounds 71m for the year to 31 March. Reorganisation costs depressed profits in 1991 and 1992 but Mr McGrath said the underlying increase was about 15 per cent a year.

The share price will be announced on 22 September and dealings are due to start on 7 October.

(Photograph omitted)