Cargill Inc. said Monday it will unwind its Black River Asset Management subsidiary, spinning out operations into three independent companies that will be run by their current money managers.
Minnetonka-based Cargill will remain an investor in the independent firms, and some of Black River's current assets will remain under Cargill's financial services wing. But Black River will essentially go away after 12 years managing money for institutional investors.
The spinoffs come two months after the company announced it would shut four of its hedge funds, paying out $1 billion of the $7 billion-plus that Black River has under management.
Both moves were prompted by a "strategic review" that Black River's board undertook earlier this year. "The [Black River] board believes employee-owned firms would create a better alignment and position them to better serve investors," said Lisa Clemens, a Cargill spokeswoman.
The agribusiness giant said that at Carval Investors, Cargill's other free-standing asset management firm, there has not been a similar review of operations.
Together, Black River and Carval make up the bulk of Cargill's industrial and financial services business, which contributed about 7 percent of Cargill's cumulative five-year earnings through early 2014, according to the most recent data available. Carval, the bigger of the two, specializes in "distressed assets" such as nonperforming loans.
Black River has historically had two main parts: hedge funds and commodity trading pools; and private equity, which often involves taking longer-term stakes in companies.
Black River's commodity trading pools, which trade in futures and options, will remain with Cargill under its Cargill Risk Management arm. Two remaining Black River hedge funds will be spun off into two separate companies.
Cargill's private equity arm, which invests heavily in the food and agriculture businesses, will be spun off as an independent company, too. Black River's food and agriculture investments include extensive farmland holdings in Colombia, as well as sugar farms and other agricultural land in Australia.
The timing of Black River's unwinding is uncertain. "It's still in the early days," said Cargill spokeswoman Lori Johnson. "We are expecting it will be some time in the next few months."
Cargill officials said they didn't know yet where the new firms would be based, or what effect the spinoff would have on Black River employees. Black River employs 200 worldwide, including 100 at its Hopkins headquarters. The earlier hedge fund closings, which were prompted by falling demand from investors, have already resulted in some layoffs.
Black River's CEO, Gary Jarrett, announced to employees Monday that he would retire as of Oct. 1, Cargill said.