Investing in Trading Companies
Finding the right trading company to invest in can be a lengthy and challenging process. Whether it is looking for a company already active in the energy market or finding a trader who is looking to start on their own, the process can easily end without any success.
At Energy Market Partners, we help bridge the gap between investors and traders, creating a dynamic product where opportunities develop and energy markets thrive. Whether you’re looking to diversify your investment portfolio or make your first investment, our consultancy offers unparalleled insights and connections.
We have already been successful in connecting investors and traders resulting in multiple new trading companies, which with the help of our services, has scaled and been profitable within the first trading year.
Furthermore, we have helped investors in finding the right established company to invest in and kickstart their growth journey towards new markets.
Who is the Investing in trading companies service for?
If you can say yes to one of the following things please reach out:
Are you an investor looking to be a part of incorporating a new trading company, but are missing the right competencies and experience?
Are you an investor looking to invest in an established trading company?
Do you have minimum 1m DKK in available capital and looking to become a part of the energy trading industry?
Then this service is designed for you. Once you have reached out to us, you will be guided through our process and, if there is a potential match, have successfully invested in a trading company which fits your investment profile.
Our deep industry knowledge, extensive network, and proven track record can help you unlock new opportunities and diversify your investment portfolio.
The process of Investing in trading companies
EMPs involvement in the investment process involves a series of structured steps, which guides you through the process of acquiring a stake in a new or already existing company.
Overall Time Estimate
The entire process from initial inquiry to finalization usually takes between 5 to 10 months.
Initial inquiry and Consultation
Step: Reach out to Energy Market Partners (EMP) if you are interested in entering and investing in the energy trading market.
This step typically requires 1 meeting, during which EMP conducts an initial consultation to understand your needs and objectives.
KYC (Know your Customer) Check
Once you’ve expressed interest, we conduct a thorough KYC check, to ensure compliance and establish trust.
This process usually takes 1 - 2 weeks.
Preparation and Planning
Together we define your objectives for your investment, including identifying strategic goals such as diversifying your investment portfolio and inclination towards discretionary and/or algorithmic trading companies. We evaluate your financial capacity to complete an investment, which helps set the parameters for the size and type of deal to pursue.
This process normally takes 2 -4 weeks.
Inclusion in the Trading Partner Catalog
After passing the KYC check and preparing and planning your investment, you will be added to EMPs Trading Partner Catalog, which is updated and sent monthly to anonymized potential partners.
Depending on when you complete the KYC, it could take 1-2 weeks to be included in the next catalog distribution.
Review and Matching
Potential partners review the catalog, and EMP facilitates initial contact if there is a potential match based on mutual interest. This includes sharing further details and possibly setting up an introduction meeting.
This step could take around 1 month, as it aligns with the monthly distribution of the catalog and our further inquiries in our extensive network.
Initial Introduction
If both parties are interested, EMP organizes an introduction meeting to explore a potential fit further. At this stage, initial discussions take place and a Non-disclosure agreement (NDA) is signed to ensure confidentiality between you and the matching company.
If multiple matching companies, a series of introduction meetings will be arranged, which affects the timeline, which can take up to 3 weeks.
Due Dilligence
If both parties agree to pursue a potential partnership further, an in-depth Due Diligence is initiated, covering financial, legal, operational review and strategic fit and many more details to ensure that all aspects are covered and a fair valuation of the company can be made prior to the negotiation.
As this step covers all aspects of the company, this is the lengthiest process and can take up to 3 months.
Valuation and Negotiation
EMP will assist in negotiations, Introevaluate the deal, terms of the deal and help structure ownership arrangements.
Depending on the complexity of negotiations and the readiness of both parties, this step typically spans 1 - 2 months.
Closing the Deal
Once all terms are agreed upon, EMP helps finalize the investment and support the combined entity through our offered services.
As all terms have been agreed upon during the Valuation and Negotiation step, Closing the Deal normally takes 1 - 2 weeks.
Post-Investment
If investing in an already existing company, EMP ensures that all relevant authorities, exchanges and local power and gas market authorities are notified and update all necessary paperwork. This also includes our other services, such as Market Entry and Market Continuity. See our Service Page for more information. If a new company is established, the timeline for the first trade is heavily dependent on choice of markets and exchanges and will require a other services as Market Matrix, Market Entry, Market Continuity. See our Service Page for more information.
Making sure that all changes are registered correctly with the relevant external counterparties for an existing company usually takes 2 - 6 weeks.
Why use Energy Market Partners?
Ensuring full anonymity: We understand that it can be important for both parties to not share their identity before they know if it is the right fit. We therefore keep the process fully anonymous, only sharing the information which is needed to get an impression of both parties. Only if both parties agree, the identity of the parties will be shared.
Transparent fee structure: Our fees are fixed, giving you the opportunity to budget our services into the overall cost of the Investment.
If we are successful in finding the right partner for you, an exclusivity agreement using our Market Access and Market Continuity services for the company will be required.
Energy Market Partners’ role: We will assist you throughout the entire process of the investment and continue to support the company you have invested in after completion, enabling the future growth of the company.
Why Use EMP Instead of DIY
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Expertise and Efficiency
EMP’s extensive experience in the energy market ensures that you are connected with the right partners quickly and efficiently. DIY efforts often lack the structured approach and industry connections that EMP offers, leading to longer timelines and increased chances of failure.
Anonymity and Security
EMP ensures full anonymity until both parties agree to proceed, protecting sensitive information. Without this, DIY efforts can expose you to unnecessary risks, including potential breaches of confidentiality.
Thorough Vetting
EMP conducts thorough KYC checks to ensure that all partners are legitimate and trustworthy, minimizing the risk of fraud or unreliable partners. DIY approaches often overlook this crucial step, leading to potential legal and financial complications.
Common Pitfalls Avoided by EMP
By partnering with EMP, you avoid these pitfalls, ensuring a smoother, more effective investing process that sets you up for long-term success.
Misaligned Partnerships
DIY efforts often lead to partnerships that are not well-aligned, resulting in conflicts and failed ventures. EMP’s matching process is designed to ensure compatibility and mutual goals.
Inadequate Due Diligence
Incomplete or insufficient due diligence can lead to significant issues later. If hidden liabilities, legal disputes, financial instability, or operational weaknesses are not identified, these problems can emerge post-investment and severely impact profitability.
Prolonged Timelines
Without the structured process that EMP offers, investing can take significantly longer, with no guarantee of success. EMP streamlines the process, increasing the likelihood of a successful outcome in a reasonable timeframe.
Frequently Asked Questions
Energy trading companies trade energy commodities like electricity, natural gas. They often operate in wholesale markets, optimizing supply and demand across different regions or time periods.
Energy trading companies participate in multiple markets, including intraday markets (within day delivery), spot markets (Day before delivery), futures markets (contracting for future delivery), and derivatives markets (hedging price risks). They trade in both regulated and deregulated markets and many are active within the European and US markets, with the APAC region experiencing more attention in recent years.
Performance is often measured by metrics like ROI (Return of Investment), profit/MWh, trading volume, risk adjusted returns, hit-rate (percentage of profitable trades) and the company’s ability to manage market risk effectively.
Key risks include market volatility, regulatory changes, geopolitical tensions, weather-related risks, and credit risk from counterparties. Price fluctuations in energy commodities can at times be swift and high.
Key considerations include the company's track record, management team expertise, risk management practices, market exposure, financial health, and the company’s approach to regulatory compliance.
Still have questions?
Start your energy trading adventure today
With EMP’s full-service approach, we make energy trading simpler and more efficient, turning market complexities into opportunities for your business to grow and succeed.