* Glencore hopes to close deal by early next year
* Banker says Canadian pension fund CPPIB interested
* Sources say Japanese trade houses also interested
(Adds details, background; changes story title to
GLENCORE-AGRICULTURE)
By Sarah McFarlane, Euan Rocha and Clara Denina
LONDON/TORONTO, Oct 2 (Reuters) - Glencore GLEN.L is in
talks with a Saudi Arabian sovereign wealth fund and China's
state-backed grain trader COFCO, along with Canadian pension
funds, to sell a stake in its agricultural assets, sources
familiar with the matter told Reuters.
Selling assets is one prong of a wider strategy by the
Swiss-based trader and miner to cut about a third of its $30
billion debts and regain investor trust, after its shares
tumbled by about three-quarters this year to record lows in
tandem with weak global commodity prices.
Glencore declined to comment while COFCO was not immediately
available to comment.
Last month Glencore said it was hoping to raise $2 billion
from selling assets including a minority stake in its
agriculture assets by early next year. The sources did not say
the likely size of the stake being sold or the likely amount it
would raise.
UBS analyst Myles Allsop has valued Glencore's entire
agriculture business at between $10 and $12 billion.
Sources said Glencore is creating a separate legal entity
for the assets involved, expected to be mostly those inherited
from the C$6.1 billion purchase of Canadian grain handler
Viterra in 2012, a deal which boosted its grain operations in
Canada and Australia in particular.
One source said Glencore was considering selling minority
stakes to several parties but no more than 49 percent of the new
entity. "They are (agricultural assets) a business that Glencore
wants to grow, but that requires capital and Glencore doesn't
want to put the capital into it because of the balance sheet ...
so they say let's sell part of it," said a source.
It was not clear which Saudi Arabian sovereign wealth fund
was involved in the talks, but state-backed Saudi Agricultural
and Livestock Investment Co (SALIC) has been active in the
sector, having entered a joint venture with U.S. grain trader
Bunge Ltd to invest in Canadian grain handler CWB in April.
SALIC did not respond to a request for comment.
China's COFCO has also been expanding its agriculture
activities, having invested $2.8 billion in 2014 via joint
ventures with Noble Group's NOBG.SI agribusiness and Dutch
grain trader Nidera, after taking substantial stakes in the
companies.
Two sources said Canadian pension funds and Japanese trading
houses were also interested in a stake in Glencore's agriculture
assets.
One banker said Canadian pension fund CPPIB is taking a
close look at the opportunity.
CPPIB declined to comment.
Sources said Glencore had appointed banks Citigroup (NYSE:C) C.N
and Credit Suisse CSGN.VX to handle the sale.