Freepoint Commodities Plans Asia Expansion After Europe Push

Freepoint Commodities LLC, the energy-trading company founded last year by three former RBS Sempra Commodities LLP executives, will open an office in Asia this year to tap growing demand for raw materials in China.

“For us as a start, it will probably be Singapore and or Beijing,” Chief Executive Officer David Messer said in a phone interview on Jan. 10 from Greenwich, Connecticut. “China is clearly one of the largest consumers on the globe of a variety of the commodities which we are trading.” The new office plans to trade oil and refined petroleum products, coal, and metals.

The company, which entered U.S. power and natural-gas markets in June, hired more than 25 traders as competitors are cutting workforces. Cargill Inc. said last month it would cut as many as 2,000 jobs globally and is restructuring its European energy trading operations. JPMorgan Chase & Co.’s managing director for environmental markets left his post in New York at the end of last year after his team was shrunk.

Freepoint will open its Asian office in the coming months, said Messer, who has worked in commodities markets for almost three decades.

Goldman Sachs Group Inc. advised clients to stay “overweight” in commodities, as a rebound in demand revives speculation of shortages. China, the world’s second-largest oil consumer after the U.S., may buy record volumes of crude this year as it bolsters emergency stockpiles and expands refining capacity. The nation may buy 9 percent more this year, according to the median estimate of seven analysts and traders in a Bloomberg survey.

Expanding in Europe

Freepoint, which started operations in February, is expanding in Europe even as the region’s debt crisis threatens to curb growth and demand for energy. Electricity consumption in Germany, the region’s biggest economy, may shrink as much as 2 percent this year, according to UBS AG.

It will start European emissions trading by the end of this month and Nordic power contracts in February, Michael Walter, London-based head of European power and natural gas and global head of coal and emissions trading, said in the same interview.

“There are uncertainties with predicting future developments in Europe, but we are very optimistic about the business opportunities for Freepoint here,” Walter said from the London office, which opened in October.

Daniel Mulder, a former employee at RBS Sempra and Mercuria Energy Group Ltd., was hired to trade carbon emissions, while Thomas Nilsson joined from Barclays Plc to buy and sell Nordic power, Freepoint said.

The company will be trading in continental power, U.K. power and gas and financial coal markets by the end of the first quarter or the start of the second quarter, Walter said.

Metals, Agriculture

Freepoint may consider going into metals and agriculture. “We have experience in the metals markets and some degree of knowledge and comfort,” said Messer. “As we identify and recruit experienced individuals we’ll look to expand our trading into metals and other markets.”

The other two founders of Freepoint are Frank Gallipoli, former president of RBS Sempra, and Robert Feilbogen, the former chief operating officer. The founders, employees and private equity funds managed by Stone Point Capital LLC have provided capital for the company of more than $300 million. Freepoint also signed a $500 million credit facility in November to support its trading activities.

(Updates with company’s plan in second paragraph.)
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