Marex, the commodity broker which shelved an IPO last year because of “challenging” market conditions, flagged its own ability to ride out volatility, as it unveiled record half-year results.
The London-based group, which is majority owned by private equity firm JRJ Group and its partners BXR Group and Trilantic Europe, said that it had “successfully negotiated the geopolitical disruption in commodities market” in the January-to-June period, which witnessed Russia’s invasion of Ukraine.
Indeed, “geopolitical risks remain elevated and market conditions volatile”, Marex said, on a day when Chicago wheat futures slumped nearly 5% at one point, while New York cotton extended a pullback from a three-session rally, spurred by US crop woes, which sent prices soaring 11.7%.
“I am proud of how our business has successfully navigated the recent market volatility, which at times has been extremely challenging,” said Ian Lowitt, chief executive at Marex, which in June last year ditched a stockmarket flotation because of “more challenging IPO market conditions”.
‘Elevated volatility’
The broker unveiled adjusted operating profits up 70% year on year at $59.0m for the January-to-June half, on revenues up 29% at $334.1m, growth it attributed to “increased client activity” and to “very strong” performances at the market making and execution and clearing businesses.
In execution and clearing – in which Marex acts as principal for investors, and provides access to 56 exchanges – revenues rose by 36% to $117m, lifted by higher deal volumes, growth in “client monies” to $7bn, and by a “positive market environment which allowed re-pricing of risk”.
In market making, in which Marex offers a direct platform for clients, primarily in agricultural, energy and metals markets, revenues soared by 84% to $101m, backed by “increased prices and elevated volatility during the period”.
By contrast, the group’s hedging and investment solutions arm, which offers bespoke hedging services, and the price discovery unit both reported “broadly stable” revenues.
‘Diversifying the firm’
Nonetheless, Marex trumpeted the breadth of its operations – which it is enhancing through both organic growth and acquisitions, including the ED&F Man Capital Markets purchase announced two weeks ago – as crucial to its performance and prospects.
The half-year results underlined “how our growth strategy of investing to increase the range of what we can offer our clients, whilst also diversifying the firm, is bearing fruit”, Mr Lowitt said.
Marex said that it that would continue a strategy of “investing behind a series of strategic growth initiatives and selected acquisitions to broaden its product offering to clients and expand its geographic footprint.
“Priorities for the next six months will be to close the acquisition of ED&F Man and begin its integration onto the Marex platform, accelerate geographic expansion worldwide, and create a scalable platform” in Asia-Pacific and the US.
The purchase alone of ED&F Man Capital Markets – which has some 450 staff and generated revenues of $235m last year – would expand Marex’s presence in Dubai, Asia-Pacific and the US, as well as by sector in equities, fixed income and metals.
Rate rise boost
Marex added that it was continuing to invest “in areas of high growth such as renewables, developing the proposition to meet and anticipate significant client demand through the transition towards a low carbon economy”.
It also noted that it was a “beneficiary” of the efforts being undertaken to address inflation growth, gaining higher interest rates for cash holdings, including those held as collateral and at exchanges.