BlackRock-backed commodities exchange startup Abaxx raises cash

ABAXX Technologies, a financial technology startup founded by a former Goldman Sachs Group commodity strategist, is raising fresh equity as it prepares to launch trading in commodities futures.

The Canadian company, which says it is on the cusp of opening a new exchange and clearinghouse based in Singapore, will use the money to fund operations and growth. The firm expects to handle its first trades in the next few weeks, chief executive officer Josh Crumb said.

Abaxx has previously received financial backing from BlackRock and CBOE Global Markets, among others, to fund the development of its technology and futures contracts for liquefied natural gas and nickel sulphate. The company is also planning to introduce contracts to enable the trading of carbon credits.

Abaxx is raising C$10 million (S$9.9 million) in a bought deal led by BMO Capital Markets and Canaccord Genuity Group at C$13 a share. That is about 10 per cent below where the shares closed on Monday (Mar 18).

“It is going to take a year or so to build liquidity in these markets,” said Crumb, a former Goldman commodities strategist. The equity raise “is really the last piece before launching”.

Abaxx has been working for about five years to set up the technology and obtain regulatory approvals to run a futures exchange and clearinghouse. It is focused purely on contracts for commodities that can be physically delivered. In LNG, its three planned contracts will cover deliveries in the Asia-Pacific, Europe and Gulf of Mexico regions.  

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

With the global expansion of gas-export capacity in countries including Australia and Canada, “we think our futures are going to be very important to manage these swings of oversupply and undersupply that LNG tends to go through”, Crumb said.

Abaxx is listed in Toronto and has a pre-deal market capitalisation of C$340 million. It has a number of other Goldman alumni on its team, including chief economist David Greely and board member Jeff Currie, Goldman’s former head of commodities research, who is now at Carlyle Group. BLOOMBERG