Bunge Ltd. (BG), the world’s second- largest oilseed processor, won approval to acquire Climate Change Capital, a London fund manager that manages the world’s largest private-sector carbon fund, after C02 prices slumped to a record.
The deal is expected to close in the coming weeks after being cleared by the U.K.’s Financial Services Authority, the White Plains, New York-based company said today in a statement. Financial terms weren’t disclosed.
Climate Change Capital, which manages a 750 million-euro ($992 million) carbon fund, said it has “obviously been impacted” by the 57 percent plunge in United Nations Certified Emission Reduction credits in the past year. Bunge has been active as both a buyer of carbon credits and as an adviser.
“It looks like a fire sale,” said Laurent Segalen, the London-based managing director of the Euro Carbon Macro Fund. The carbon funds managed by Climate Change Capital have lost money and the manager probably needed capital, Segalen said today by phone.
The Sunday Times reported in December that Bunge was interested in buying Climate Change Capital for its expertise in finding and developing emission-reduction projects in emerging markets that generate carbon credits.
Climate Change Capital’s carbon finance team has committed more than 850 million euros to companies and projects generating emission reduction credits under the United Nations Clean Developments Mechanism, the world’s largest greenhouse-gas offsetting market.
The UN credits slid to a record low of 3.28 euros a metric ton on Jan. 16, according to data from ICE Futures Europe in London, the biggest exchange for carbon trading.
They have fallen in value because the European Union carbon market in which they are used is oversupplied by 9.1 percent in the five years through this year, according to a model by Bloomberg New Energy Finance in London. Banks including JPMorgan Chase & Co. and UBS Securities LLC have trimmed traders and analysts in climate-related businesses, as permit prices as well as shares in clean energy companies fall.
Climate Change Capital also manages a 200 million-euro private equity fund that invests in clean technology. Its funds won’t be merged with those belonging to Bunge, said Denise Cocker, a spokeswoman for Climate Change.
The carbon fund is split between a private equity fund and a managed account, according to Cocker.
“The fund is obviously impacted by the carbon price,” she said.
Assets in Climate Change Capital’s underlying investment vehicles are owned by investors. As such they are not subject to consolidation in Bunge’s financial statements, according to the statement.