Goldman Sachs Group Inc., which bought aluminum warehouse firm Metro International Trade Services LLC in 2010, has received inquiries from potential buyers after the London Metal Exchange imposed new rules on how storage facilities operate, a person briefed on the matter said.
Goldman Sachs hasn’t engaged in a formal sale process, said the person, who requested anonymity because the talks are private and didn’t identify the prospective purchasers. Gary Cohn, president of the New York-based company, told CNBC in July that it was allowed to own Metro for 10 years and that it would sell the business at “an appropriate time.”
The LME, the world’s biggest industrial-metals marketplace, changed its rules earlier this month to speed up withdrawals from warehoused stockpiles amid consumer complaints that prompted scrutiny from U.S. regulators. The changes will affect depots where waiting times exceed 50 calendar days, a broader group than the original proposal that pertained to sites where waits were longer than 100 days.
Goldman Sachs received interest from private-equity firms and international commodity companies in potentially buying Metro after the rule change eliminated some uncertainty in the warehouse industry, the person said. The bank, the fifth-biggest in the U.S. by assets, may not pursue a sale in the near future, the person said.
Under the rule changes, warehouses with waiting times of more than 50 days will be required to ship out metal every day exceeding the amount they take in by at least 1,500 metric tons. The LME also said this month it will review its warehouse system every six months and is studying its powers to regulate warehousing companies’ charges.
Consumers of metals including brewer MillerCoors LLC complained that lengthy waits for stockpiled supplies inflated costs. That spurred U.S. regulators to subpoena documents from warehouse operators including Metro, according to people with knowledge of the probe.
The LME’s changes are scheduled to take effect April 1. The LME, a unit of Hong Kong Exchanges & Clearing Ltd. where investors bought and sold contracts worth $14.5 trillion last year, oversees more than 700 warehouses worldwide.
The Financial Times reported on the increased interest in Metro earlier today.
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