--Move teams World Bank's investment arm with commodities firm
once responsible for driving up cocoa prices
--Stated aim is to develop sustainable farming, improve
traceability within supply chains
--World Bank says satisfied with Armajaro's "clear separation of
governance" from other business activities
NEW YORK/LONDON -- The World Bank plans to invest in U.K.
commodities dealer Armajaro Trading Ltd., founded by Anthony Ward,
whose hedge fund cornered the cocoa market two years ago and drove
prices to 33-year highs.
The move teams the World Bank's investment arm, the
International Finance Corporation with a commodities firm that was
once responsible for driving up cocoa prices, with a stated aim of
developing sustainable farming and improving traceability within
its supply chains. That could burnish Armajaro's reputation in the
industry and help it grow.
Ward's Armajaro hedge fund two years ago took the largest
delivery from exchange stocks in 14 years, causing prices on
London's Liffe exchange to soar to GBP2,709 a metric ton
($4,275/ton).
When asked whether the move was a concern, a spokesperson for
the International Finance Corporation said: "IFC is satisfied with
the results of its due diligence on Armajaro Trading.
"We are confident that there is a clear separation of governance
from the other business activities of its shareholders," said the
spokesperson in an e-mailed statement, referring to the hedge
fund.
Food-price inflation has persisted as a concern especially in
emerging markets, where food costs tend to represent a greater
portion of workers' smaller incomes. Food prices set record highs
several times early last year amid global supply concerns for
cereals, sugar and cocoa. Rising food prices also were cited as one
of the catalysts for unrest in North Africa, which led to the
downfall of leaders in Tunisia, Egypt and Libya.
IFC, the World Bank's investment arm, is lending $55 million to
Armajaro and has an option to receive a 6% stake in one of the
world's largest traders of soft commodities, Armajaro said.
"We are delighted to receive this endorsement from a high
quality investor such as IFC, which will help us in our goal to
become the partner of choice in the agri-commodity supply chain,"
said Armajaro Trading's Chief Executive Richard Ryan.
IFC sees the move as a way to tap into Armajaro's expansive
access to farmers.
Sujoy Bose, chief investment officer and head of the IFC ALAC
Fund, said: "Armajaro Trading's extensive sourcing network, deep
customer relationships with global buyers, strong expertise in the
commodities it trades and its focus on traceable and sustainable
products has put the company in a unique position in the
fast-growing agri-commodities market."
The World Bank has already invested in other agricultural
trading houses, taking stakes in Olam International Ltd. of
Singapore and the Switerzland-headquartered Ecom Agroindustrial
Corp.
Armajaro has operations in cocoa, coffee and sugar producing
countries, such as Brazil, Colombia, Ecuador and Ghana.
-By Neena Rai, Dow Jones Newswires; 4420-7842-9450;
neena.rai@dowjones.com
--Leslie Josephs in New York contributed to this article.