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Noble Group shares surge on news of key investor

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Singapore (AFP)

Shares in troubled commodities trader Noble Group soared Tuesday, their biggest rise in more than a year, after the company said it was in talks with a strategic investor.

Singapore-listed Noble said in a statement to the stock exchange that it is "currently engaged in discussions regarding a possible strategic investment" in the firm.

It did not name the company but people familiar with the talks identified the potential investor as China's Sinochem Group, Bloomberg News reported.

The report said a partnership with Sinochem would deepen Noble's ties with China, the world’s biggest consumer of resources.

The firm rallied 17 percent at one point before paring the gains to close 11.7 percent higher.

Chinese sovereign wealth fund China Investment Corp is already one of Noble’s biggest shareholders.

In its statement, however, Hong Kong-based Noble cautioned that "no binding arrangements have as yet been entered into with respect to this possible transaction and, accordingly, there can be no assurance that this transaction will be concluded".

The talks are still at an early stage and the Chinese group is interested in Noble's international energy trading business, which covers oil, coal and natural gas.

"It seems like investors and traders are speculating on this deal, which is why the price went up," CMC Markets analyst Margaret Yang told AFP.

She said that despite the lack of details, the "market has started to price in the possibility of this deal going through".

Yang added that any deal with Sinochem would be good for Noble, whose shares were hammered in 2015 by a fall in commodities prices and suffered a credit rating downgrade.

It had also faced allegations by little-known Iceberg Research of irregular accounting practices.

"This will help to alleviate concerns about liquidity and also improve investor confidence in this company," Yang said of the potential tie-up.

"And for Sinochem, investing into Noble is an important step to gain exposure to the global supply chain ... so it looks like a win-win situation if the deal can go through."

Noble chairman Richard Elman told Bloomberg last year the company was looking for a strategic investor after it raised $500 million in fresh equity.

A Sinochem spokesman in China declined comment Tuesday when asked about the talks.

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