ADFG's Goldilocks ups stake in Noble Group

ADFG-owned fund acquired first 50 million shares in June

ADFG's Goldilocks is now the fifth-largest shareholder in Noble Group after China Investment Corp. Edgar Su / Reuters

Noble Group’s newest major shareholder Goldilocks Investment has raised its holding in the embattled commodity trader and now controls almost as much equity in the company as China’s sovereign wealth fund.

The fund, controlled by Abu Dhabi Financial Group, increased its stake to 8.19 per cent from 5.03 per cent after adding 41.6 million shares on July 6, according to a filing to the Singapore Exchange on Monday. That makes it the fifth-largest shareholder after China Investment Corp., which has a 9.61 per cent holding, according to data compiled by Bloomberg. The stock rose 3.2 per cent to 64.5 Singapore cents early on Tuesday.

Noble Group is seeking a strategic investor to restore confidence after a collapse in its securities, and Goldilocks’ move follows an agreement between the company and its banks to extend a US$2billion credit facility - albeit just for 120 days - allaying immediate concerns Noble could default. Goldilocks first disclosed a major stake on June 22.

Abu Dhabi Financial Group’s media representatives did not respond to requests for comments made after usual business hours.

While the stock has rallied more than 40 per cent since then, it’s still down over 60 per cent for the year. The company, once Asia’s largest commodity trader, has endured several turbulent years marked by losses, credit-rating downgrades, and accusations of improper accounting that it has denied.

“There’s always a price that somebody will see value and perhaps they have,” said Nicholas Teo, a trading strategist at KGI Securities (Singapore). “Is it strategic? We will only see as they continue to accumulate.”

Even after the reprieve on credit, Noble Group remains under the gun. Fitch Ratings Ltd. has said it doesn’t expect a meaningful recovery in the trader’s ability to generate profit this year, while the risk of default hasn’t gone away, according to a Goldman Sachs Group Inc. note on July 7, which cited earnings uncertainty and cashflow pressure.

*Bloomberg