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Categorized | Financial

Engelhart co-founder set to leave after quarterly loss


Posted on November 22, 2016

One of the trio of executives who launched commodity trader Engelhart CTP is set to leave the business as it struggles to contain the fallout from a near quarter-billion dollar loss.

Chief operating officer Nick Brewer is currently on leave, according to people close to the company, and is expected to depart in the near future.

Engelhart, the London-based trading firm spun out of Brazilian bank BTG Pactual, lost about $225m in the third quarter after large wrong-way bets on crude oil, grains and oilseeds. These trades wiped out more than 20 per cent of the net income that it had earned since its launch four years ago.

Losses on this scale marked a watershed for a business that had previously enjoyed turbocharged growth, under the leadership of industry veteran Ricardo Leiman, the former chief executive of Noble Group, alongside chief risk officer Dean Morris and Mr Brewer.

News of Mr Brewer’s likely departure follows similar reports about Nicolas Janssens, ECTP’s chief operating officer for grains. He was said to be among senior traders to have left the firm in recent weeks.

Last month, ECTP announced plans to cut almost a fifth of its 800 staff, scaling back in metals, minerals and energy to refocus on agricultural trading — the biggest part of its business.

At that time, ECTP’s chairman Huw Jenkins told the Financial Times that the third quarter had been “tough” but dismissed rumours that its chief executive Mr Leiman had left.

However, third-quarter results published earlier this month by BTG Pactual revealed ECTP suffered “significant underperformance”. In the three months to end-September, the Brazilian banking group’s sales and trading division, which included ECTP, recorded a loss of R$416m ($123m).

Without Engelhart, the unit would have recorded revenue, or gross profit, of R$345m, implying the commodities trader slumped to a loss of R$761m, or about $225m. In the six months to June 30, ECTP reported net income of $213m.

Previously called BTG Pactual Commodities, Engelhart was set up in March 2013 as the Brazilian bank looked to diversify its business and expand overseas. It quickly built up its commodity trading business with operations around the world and staff of 800.

Last year, ECTP’s executive team moved to extricate the business from its parent after the Brazilian bank’s founder, André Esteves, was arrested over the scandal at Brazilian oil company Petrobras. ECTP completed its spin-off from BTG shortly after the bank’s results were announced.

Mr Brewer played a key role building up the commodity business, and had worked with Mr Leiman and Mr Morris at Noble Group. They then helped to launch BTG Pactual Commodities and were seen in the industry as the driving force behind its growth.

The trading house declined to comment on Mr Brewer’s position at the company or to discuss the reasons behind the loss. Neither Mr Brewer or Mr Janssens could be reached for comment.

A spokesman for ECTP said the company was still profitable for the year in spite of the third-quarter loss.