Goldman buys stake in specialist Danish energy trader

Goldman Sachs Group Inc. bought a minority stake in Denmark’s InCommodities AS to tap into the firm’s specialist knowledge of short-term power and gas trading.

The deal is expected to close in the next couple of months, said Jesper Severin Johanson, chief executive officer of the Aarhus-based company founded four years ago. The accord is still subject to regulatory approval, the companies said in a statement, without providing financial details or the size of Goldman’s stake.

InCommodities is one of the rapidly growing trading companies founded in Denmark’s second-largest city in the last decade that seeks to profit from how the renewable energy revolution has changed the energy markets. Through the firms’ relatively early understanding of the importance of efficient data crunching, the city has become Europe’s hub for short-term trading.

“As the installed capacity of weather dependent renewables grows, electricity markets are becoming increasingly complex,” said Ed Emerson, head of global commodities trading at Goldman.

“Technology and big data play an important role in managing associated risks. InCommodities has built and invested heavily in an energy trading platform that automates the value chain of data analytics, decision making algorithms, execution and settlement.”

Danske Commodities A/S was the first specialist trading company that emerged from Aarhus, back in 2004. It was snapped up by Norwegian energy major Equinor ASA in a 400 million-euro ($T472 million) deal. MFT Energy A/S, another trader that’s also expanded to Istanbul, Athens and Singapore, is on track for an initial public offering in 2023.

“We see it as something absolutely positive for our entire industry that a heavy player like Goldman Sachs is buying into InCommodities,” said Bo Palmgren, chief operating officer at MFT Energy. “It only strengthens our own ambition for global growth and an IPO within a few more years.”

InCommodities was founded by Johanson, Emil Gerhardt, Jeppe Hojgaard and Christian Bach. They will all remain at the company, Johanson said. It will remain independent and there will be no day-to-day cooperation with Goldman, which has also traded European power and gas from its London headquarter for many years.

Strategic Investor

Goldman “is joining as a strategic and active investor, and will be involved in the board of directors as well,” he said.

InCommodities will continue to focus on expanding its technology and its trading in the electricity, natural gas and emissions markets, moving into new regions when there is scope for it, Johanson said. It’s currently active in Europe as well as North America, while Asia is becoming more interesting too, he said.

“Europe is the world champion in integrating renewables into the energy mix and the volatility that brings to the markets needs to be taken care of,” he said.