Trafigura’s New Boss Is An Ex-Soldier Who Says Profits Come First

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(Bloomberg) — A few months ago, the man who would become Trafigura’s next chief executive, Richard Holtum, assembled the commodities trader’s staff in Singapore.

The message was simple, according to some of the people there: it’s time to put aside the distractions and focus on what’s most important – making money.

The address, with sound from Gordon Gekko’s famous “Greed is good” speech in the movie Wall Street, was typical of Holtum, according to 11 people who have worked with him, who spoke to Bloomberg on condition of anonymity.

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After rising rapidly through the ranks at Trafigura, the 39-year-old is poised to become the third chief executive in the company’s history. Little is known outside Trafigura, people who have dealt with people describe it as ambitious and direct, with a razor-like focus on profit.

Holtum joined Trafigura ten years ago through the junior trader programme, but in 2019 was running the company’s global gas business – a role which has since expanded to include power and renewable energy. The operation, which had been envisioned for Trafigura’s traditional business of metals and oil trading, has grown significantly to become a key profit driver, given the energy crisis following Russia’s invasion of Ukraine.

Trafigura, which declined to comment on details for this story, is preparing to hand over leadership to Holtum, people familiar with the matter said this week. Current CEO Jeremy Weir is expected to stay on as chairman.

“He has risen to stardom,” said Orhan Gunes, a commodities financier who now runs the trade finance platform TradeQraft. “To be the head of a department so quickly and then to become CEO is incredible.”

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For Trafigura, the CEO’s handover comes at an important moment. The company, which started life as an unassuming outsider, never became big and powerful, competing with Vitol Group and Glencore Plc for the title of the world’s largest commodity trading house and earning more than $17 billion in profits over the past three years.

But it still faces a number of challenges – a wave of employee departures, trading debacles, and ongoing corruption allegations that will see the company and its former chief operating officer go on trial in Switzerland later this year. Most importantly, the drop in profits means Holtum’s first head will decide whether Trafigura can continue to buy back shares – the main way the company’s employee-owned senior traders are paid.

Pole position

Even at Trafigura, few people outside the gas and power team knew about Holtum when Bloomberg first reported earlier this year that he was in pole position to succeed Weir as CEO.

Educated at Clifton College, a private school in Bristol in the west of England, Holtum’s path to the C-suite began long before he started trading commodities. He graduated first in International Relations from St Andrews, where his extracurricular activities included captaining the polo club and leading the student investment society. He is also a marksman, finishing second in the Scottish Open shooting competition.

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From there he went to Sandhurst, the British army school for officers, and then to the Royal Scots Dragoon Guards, rising to the rank of captain and spending time in Afghanistan, where he worked in an Afghan army training squadron.

He left the army to join Glencore’s crude oil department in 2012, before moving to Trafigura where he joined the booming liquefied natural gas, or LNG, trading team under the leadership of Hadi Hallouche. When Hallouche moved on to other projects in Trafigura’s oil division, Holtum was appointed head of LNG in 2018.

The timing is good. LNG is a growth area for commodity traders as the US export boom transforms the market. Then Russia’s full-scale invasion of Ukraine sent prices soaring – and sent enormous profits to traders who could bear the risk.

Trafigura does not break out the gas division’s results in its annual report, but has singled out the team for praise. In October 2022, Holtum became head of global gas and power and was appointed to Trafigura’s management committee.

“He’s smart and his timing is always good, but the success in his division is fantastic,” said Jean-Francois Lambert, a consultant and former commodities banker. “The fact that the next leader of the energy and metals trading group comes from gas and power is very important – that’s how the future will work.”

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That sentiment echoes recent comments from Holtum himself. Speaking at a conference in Houston this week, he explained how the global LNG market has matured and grown in liquidity to more closely resemble other established commodity markets like oil.

“We have entered the golden decade of LNG and the golden decade of gas,” he said.

Dealmaker Creative

Holtum comes across as a hard taskmaster, but with strong interpersonal skills that have helped him win over top clients and rise through the ranks of Trafigura. He is also known as a creative dealmaker – those who have done business with him say he will always find a way to make a deal, while some point to his ability to find contractual wiggle room when it means an opportunity to increase Trafigura’s profits.

In one case, in 2022, Trafigura has a contract to sell LNG to Eni SpA, which the Italian company then agreed to sell to Pakistan. But when prices rose due to Russia’s full-scale invasion of Ukraine, Trafigura diverted shipments to the spot market, where it could generate greater profits. Holtum signed off on retracting the post, according to people familiar with the matter.

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Internally, his hobbies of shooting and polo helped him connect with Jose Larocca, Trafigura’s long-time powerbroker and oil chief, whose passion for horse riding saw him compete in his fifth Olympic Games this year, after announcing his retirement from Trafigura.

However, company insiders expected Hallouche, rather than his former junior, to be the next CEO until last September, when an internal power struggle ended with Hallouche being demoted from the management committee, now renamed the “executive committee.”

Holtum was considered an acceptable candidate for various factions within Trafigura, and Weir began grooming him as his successor, bringing him to important meetings in other parts of the business.

In recent months, Holtum has stepped more clearly into the role of CEO-designate. In addition to the townhall talks in Singapore, he has held meetings with the heads of different commodities and the team at Trafigura to discuss the trading book with him, according to several people.

The most immediate challenge it will face is Trafigura’s declining earnings as the boom years following the Covid pandemic and the Russian invasion of Ukraine begin to fade. The company’s profit in the half year to March fell 73% – even from record levels a year earlier. Meanwhile, the company is still dealing with a series of trading fiascos, including being the victim of a massive alleged nickel fraud and a sizable problem with oil debt in the niche market of Mongolia.

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Add to the departure of a wave of Trafigura staff, from mid-level traders to some of the most senior executives of the company and the largest shareholder – including Larocca, as well as Mike Wainwright, the former chief operating officer who is due for trial in Switzerland (he denies the accusation).

There are various reasons for the departures, and the firm has been on a major hiring spree, but the result is that Holtum faces an immediate challenge in navigating the buyback bill shows Trafigura.

Companies generally buy back shares from current and departing employees within four years – but a combination of falling profits and the exodus of key shareholders means that could be difficult to do. Spreading buybacks over a long period of time, as the company has done in the past, is unlikely to be popular with Trafigura’s partners.

“Trafigura has been very profitable with its existing model but is now at a crossroads,” said TradeQraft’s Gunes. “The question is whether it has reached the limit of growth or whether this new management can find a way to continue feeding that profit. This is a very difficult task for the new leader.

—With assistance from Anna Shiryaevskaya, Stephen Stapczynski and Ruth Liao.

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