Trafigura’s New Boss Is Ex-Soldier Who Says Profit Comes First

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(Bloomberg) — A few months ago, the man set to become Trafigura’s next chief executive, Richard Holtom, gathered the commodities trader’s staff in Singapore.

His message was simple, according to several people who attended the meeting: It’s time to put aside distractions and focus on what matters most — making money.

The rhetoric, which echoed Gordon Gekko’s famous “greed is good” speech in the movie “Wall Street,” was typical of Holtom, according to 11 people who worked with him and who spoke to Bloomberg on condition of anonymity.

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After a meteoric rise through the ranks at Trafigura, the 39-year-old is poised to become the company’s third chief executive. Although he is little known outside Trafigura, people who have dealt with him describe him as ambitious, direct and fiercely focused on profits.

Holtom joined Trafigura a decade ago through its junior trader programme, but by 2019 he was already running the company’s global gas business – a role that has since expanded to include power and renewables. The operations, once an afterthought to Trafigura’s traditional metals and oil trading businesses, have grown sharply to become a key driver of profit, fuelled by the energy crisis that followed Russia’s invasion of Ukraine.

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

“He has had an incredible rise,” said Orhan Gunes, a commodity financier who now runs trade finance platform TradeQraft. “For him to be head of the division so quickly and then CEO is exceptional.”

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For Trafigura, the handover of the CEO role comes at a pivotal moment. The company, which started life as a small firm, has never been bigger or more powerful, competing with Vitol Group and Glencore for the title of the world’s largest commodities trader, and generating profits of more than $17 billion in the previous three years.

But the company faces a number of challenges – a wave of staff departures, business collapses and ongoing corruption allegations, which are expected to see the company and its former chief executive go on trial in Switzerland later this year. Most significantly, falling profits mean that Holtom’s first headache is likely to be whether Trafigura can keep up the pace of share buybacks – the main way the employee-owned company’s top traders get paid.

Pole location

Even within Trafgura, few people outside the gas and power team knew much about Holtom when Bloomberg first reported earlier this year that he was in the running to succeed Weir as CEO.

Holtom was educated at Clifton College, a private school in Bristol in the west of England, and began his path to senior positions long before he started trading commodities. He graduated with a distinction in international relations from St Andrews, where his extracurricular activities included leading the polo club and the Student Investment Society. He was also an accomplished marksman, coming second in the Scottish Open Shooting Competition.

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From there he went to Sandhurst, the British Army’s school for officers, and then to the Royal Scots Guards, rising to the rank of captain and spending time in Afghanistan, where he served in a squadron training the Afghan army.

He left the military to join Glencore’s crude oil division in 2012, before moving to Trafgura where he joined a fast-growing team trading liquefied natural gas, or LNG, under Hadi Haloush. With Haloush moving on to other roles in Trafgura’s oil division, Holtom was appointed co-head of LNG in 2018.

His timing was good. LNG had been a growth area for commodity traders as booming U.S. exports transformed the market. Then Russia’s full-scale invasion of Ukraine sent prices soaring — and huge profits for traders who could afford the risk.

Trafigura does not detail the results of its gas division in its annual reports, but it singled out the team for praise. In October 2022, Holtom became global head of gas and power and was promoted to Trafigura’s inner circle, the Management Committee.

“He is smart, and of course the timing was good, but the success he has achieved in his division has been very impressive,” said Jean-François Lambert, a consultant and former commodities banker. “The fact that the next head of a large energy and metals trading group is coming from the gas and power sector is very telling – that is how the future will develop.”

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These sentiments are consistent with recent comments by Holtom himself. Speaking at a conference in Houston this week, he described how the global LNG market has matured and become more liquid, becoming more like more established commodity markets like oil.

“We are entering the golden decade of LNG and the golden decade of gas,” he said.

Creative Deal Maker

Holtom comes across as a tough guy to get things done, but he has strong interpersonal skills that have helped him land big clients and rise through the ranks at Trafigura. He’s also known as a creative dealmaker — people who’ve dealt with him say he’ll always find a way to make a deal work, while some point to his knack for finding contractual wiggle room when it means an opportunity to boost Trafigura’s bottom line.

In one case, in 2022, Trafigura had a contract to sell LNG to Eni, which the Italian company in turn agreed to sell to Pakistan. But when prices spiked in the wake of Russia’s full-scale invasion of Ukraine, Trafigura diverted the cargoes to the spot market instead, where it could make a much bigger profit. Holtom agreed to cancel those deliveries, according to people familiar with the matter.

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On the domestic front, his hobbies of shooting and polo brought him into contact with José Larroca, Trafgura’s power broker and long-time oil boss, whose passion for horse riding led to his fifth Olympic Games this year, after announcing his retirement from Trafgura.

However, company insiders had expected Haloush, not his former colleague, to become the next CEO until last September, when an internal power struggle ended with Haloush being demoted from the management committee, now renamed the “executive committee.”

Holtom was seen as an acceptable candidate to the various factions within Trafgura, and Weir began grooming him as his successor, taking him to key meetings in other parts of the company.

In recent months, Holtom has taken on a more visible role as CEO designate. In addition to the talks in Singapore, he has been meeting with the heads of various commodities companies and their teams at Trafgura to discuss their trading books, according to several of the people.

The most pressing challenge he will face is Trafigura’s declining profits as the boom years following the Covid pandemic and Russia’s invasion of Ukraine begin to fade. The company’s profits in the first half of the year to March fell 73% — albeit from record levels a year ago. At the same time, the company is still dealing with a series of business disasters, including being the victim of a massive alleged nickel fraud and a major oil debt problem in the niche market of Mongolia.

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Add to that a wave of departures from Trafgura, from mid-level traders to some of the company’s top executives and largest shareholders — including LaRocca, as well as Mike Wainwright, the former chief operating officer who is due to stand trial in Switzerland (he denies the charges).

There are a variety of reasons behind the departure, as the company has been on a hiring spree, but the upshot is that Holtom faces an immediate challenge in dealing with the Trafgura share buyback bill.

The company typically buys back shares from its current and departing employees over four years – but the combination of falling profits and the departure of key shareholders means it may struggle to do so. Spreading buybacks over a long period of time, as the company has done in the past, is unlikely to be popular with Trafgura’s partners.

“Trafigura has been exceptionally profitable with its model, but it is now at a crossroads,” said Tradecraft’s Jones. “The question is whether it has reached the limits of its growth or whether the new management can find ways to continue to fuel that profitability. It is a very difficult task for the new leadership.”

—With assistance from Anna Shiryevskaya, Steven Staszynski, and Ruth Liao.

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