Phibro is rebounding well from the $100 million pay scandal involving its star trader, Andy Hall.
Phibro opened its unit to hedge fund investors this month through Park Hill Group, a Blackstone subsidiary.
Citi relinquished the energy-trading unit last month, selling to Occidental (OXY) after news of government-owned Citi’s contract-bound obligation to pay Hall $100 million as part of a profit-share agreement. Hall’s team earns under 30% of Phibro’s profits, which would likely have been paid with TARP funds, considering Citi (C) would have been insolvent without them.
Occidental bought Phibro for $250 million, a bargain for a unit that has generated more than twice that amount in one year. Occidental said $250 million was about equal to Phibro’s liquid assets, which hedge fund investors might now help the unit raise.
Even though the scandal generated a lot of noise for Hall, his team at Phibro now finds itself about to join an oil house, a better fit for the unit than Citi, and well poised to receive a lot of attention from hungry hedge fund investors that want in on Phibro’s strong track record. The unit was profitable almost every year it was at Citi, a little over a decade.