Cargill Inc. has announced that its investment arm, Black River Asset Management, will split from its parent company, and will be divided into three distinct firms, each focused on different business lines, including relative value fixed income, emerging market credit, and private equity.

 

Following a review of the Cargill subsidiary completed on September 25, a board consisting of Cargill and Black River executives “decided, along with their management teams, that employee-owned firms would create better alignment and position each team to best serve investors,” said a company spokeswoman.

 

The announcement comes after a challenging period for Minnesota-based Black River; in July it was announced that the hedge fund and private equity firm planned to close four of its hedge funds and return more than $1 billion to investors due to lack of demand for the funds.

 

Black River is expected to divide into three firms – the first, relative-value fixed income which manages more than $2 billion and which will be led by chief investment officer, Jeff Drobny, and the remaining two, which will manage a combined $3 billion and will focus on emerging market credit and private equity.

 

The restructuring accompanies an internal shift in leadership at Cargill as well. In an internal memo on September 28, CEO Gary Jarrett announced his retirement effective October 1 after nearly 40 years with Cargill and Black River. Guilherme Schmidt will be joining Cargill as part of its treasury group, but the future plans of Cargill co-founder Jeremy Llewelyn remain unclear.

 

In addition to the split, two commodity funds focused on agriculture and energy will be removed from Black River and included in a business within Cargill, but the names of the firms were not immediately released.

 

Black River has recently been engaged in communication with its investors regarding the restructuring which generally requires investors consent, but investors who do not approve the move may be able to redeem their money.

 

This planned spin-off of asset management subsidiary Black River is the first such move in recent Cargill company history, but a company spokeswoman stated that the company intends to “continue to be an investor” and move forward with regular reviews of its portfolio.