Tuesday, September 15, 2009

Carbon Trading: JPMorgan to buy EcoSecurities for $204 million (JPM; ECO.L)

We've been following this for a while, see links below. From Reuters:
JPMorgan Chase & Co agreed to buy carbon offset aggregator EcoSecurities for 122.9 million pounds ($204 million) on Monday, trumping a bid from the firm's co-founder, to boost its carbon-credit trading business.

J.P.Morgan Ventures Energy Corp., a subsidiary of the bank, said its 100 pence-a-share bid, made through Carbon Acquisition Company, had the backing of shareholders representing 19.9 percent of the company.

It said EcoSecurities had successfully realized value from sourcing, developing and trading emission reductions, and it noted the firm had recorded its first period of profitability in the first half.

The offer represents a 120 percent premium to the group's share price before the start of the offer period on June 4.

"It looks like JPMorgan is backing the current management to take the business private," said Ken Rumph, an equity analyst at Nomura Code.

Ireland-based EcoSecurities Group Plc develops clean energy projects under the Kyoto Protocol's Clean Development Mechanism, which allows companies to export cuts in greenhouse gas emissions to emerging countries like China and India, where such reductions are cheaper to make.

EcoSecurities shares were up 11.5 percent at 101.5 pence by 1411 GMT (10:11 a.m. EDT)....MORE

Also from Reuters:

FACTBOX: Investment banks in carbon trading

Investment banks are chasing opportunities in a $126 billion carbon market as the U.S. Senate considers a federal climate bill that would launch a cap and trade scheme.

Governments worldwide are also expected to lean heavily on the private sector and carbon markets in particular, as a way to raise finance to fight climate change, at a major U.N.-led meeting in Copenhagen in December.

Investment banks have three main strategies in carbon: buy and sell emissions rights on behalf of corporate clients to profit from bid-offer spreads; proprietary trade with their own money; investment in carbon offset development under the Kyoto Protocol's clean development mechanism (CDM).

In the last category, JPMorgan Chase & Co said on Monday it was buying carbon offset company EcoSecurities for an agreed 123 million pounds ($204 million).

The role of traders in carbon markets is under scrutiny in the United States. One lawmaker guiding the draft climate bill through the Senate, Sen. John Kerry, said the bill should have tough controls on speculation.

Following is a list of some of the more active banks, and what they do --

Bank of America Merrill Lynch

* CDM project originator; structuring CDM deals

* lender to renewable energy projects, including CDM

Barclays Capital

* market maker for clients and through prop desk

* says has traded 2 billion tons of carbon allowances

* has no proprietary investment in carbon commodities

* research and structuring teams


* equity investment in Sindicatum Carbon Capital Continued...

Our recent posts on ECO:

Carbon Trading: EcoSecurities co-founder considers bid for company (ECO.L; CAO.L)


For those interested, the WSJ's Jeffrey Ball did an extensive piece in April, '08:

Two Carbon-Market Millionaires Take a Hit as U.N. Clamps Down (ECO.L)

The other carbon trader we follow is in Al Gore's GIM portfolio, Camco International:

Carbon Trader Praises Chinese Carbon Trade (CAO.L)

Carbon: Al Gore, Score! Camco Int'l posts maiden full-year profit (CAO.L)

Al Gore. No Score: Camco shares fall on delay of '08 results release (CAO.l; CAMIN.L)

Al Gore: Score! Generation Investment Management ups Stake in Camco International (CAMIN.L; CAO.L)


Carbon Trading: EcoSecurities Jumps Again, Second Bidder (ECO.L)
Trading Emissions PLC Ups Stake in Ecosecurities (ECO.L; TRE.L)
Fresh takeover bids expected for carbon asset firms (ECO.L; CAO.L; TRE.L)
Carbon Trade: "Swedes swoop on EcoSecurities" (ECO.L)
Credit Suisse Cuts EcoSecurities Stake as UBS Alumnus Backs Bid (ECO.L)
And, on Sep. 3, "Carbon Trade: "EcoSecurities says in offer talks with another party" (ECO.L)"