- Mergers & Acquisitions
PETRONAS sells stake in African-based oil retailer Engen to Vivo Energy
Malaysia’s state-owned oil and gas company PETRONAS is selling its 74% stake in Engen, an African-based energy group focused on the marketing of petroleum, lubricants and functional fluids, chemicals and retail convenience services, to Vivo Energy. Engen has approximately 1,280 service stations and hundreds of commercial customers in sub-Saharan Africa and the Indian Ocean Islands.
Vivo Energy, which is owned by global energy and commodities company Vitol Group, operates and markets its products in countries across North, West, East and Southern Africa. The Group has a network of more than 2,600 service stations in 23 countries operating under the Shell and Engen brands and exports lubricants to a number of other African countries.
The Engen acquisition will produce a powerful market player in the African continent, with more than 3,900 service stations and more than two billion litres of storage capacity across 27 African countries.
The transaction is currently pending regulatory approvals. Rand Merchant Bank, division of FirstRand Bank Limited, and Standard Bank advised Vivo Energy. Morgan Stanley and Rothschild & Co are advisors to PETRONAS on this transaction.
Engen’s second-largest shareholder, Phembani, a black-controlled South African company focused on the broader energy sector, will remain invested as a 21% shareholder in the company. A Phembani-led consortium holds the remaining 4.8% stake.
“The Phembani Group is proud to have been a long-term shareholder in Engen since 1999, partnering with PETRONAS and helping to grow Engen into a valuable South African corporate citizen, meeting the needs of millions of ordinary South Africans. We are pleased to partner with Vivo Energy in the next phase of Engen’s growth. We are confident that together we will support Engen’s continued growth, enabling it to realise its vision,” said Phuthuma Nhleko, chairman and co-founder of Phembani Group.
The value of the transaction was not revealed. PETRONAS has been exploring options for its South African business for some time. Last year, Bloomberg reported that the stake sale was expected to draw bids of about USD2 billion. Engen had ZAR43.2 billion (USD2.43 billion) of total assets in 2021. PETRONAS first acquired a 30% stake in Engen in 1996 for about USD436 million and became its majority shareholder in 1998.
In 2017, Vivo Energy Holding B.V. purchased more than 300 Engen-branded service stations in 10 countries in Africa owned by Engen International Holdings (Mauritius) Limited, a 100% subsidiary of Engen Limited. This transaction added nine new countries to Vivo Energy’s network. Engen Holdings (Pty) Ltd retained its interest in Engen Petroleum Limited (the South Africa business) and Engen’s businesses in Mauritius, Botswana, Ghana, Namibia, Swaziland and Lesotho. The deal was restructured the following year to transfer Engen’s international operations in nine Sub-Saharan countries. In 2021, PETRONAS announced that it will permanently close its crude oil refinery in Durban, South Africa. Engen said it will convert the Durban refinery into a storage terminal.
“Vivo Energy’s focus has been to invest to grow our business, and I am proud that we have more than doubled the size of our network since our formation in 2011. Four years ago, we acquired the Engen business in nine African markets, and have since worked to enhance and develop these. Vitol’s acquisition of 100% of Vivo Energy last year brings more opportunities to grow even faster. Completion of this transaction, which reunites the Engen brand across Africa, will be a step change in our growth and represents a significant commitment to the South African market whilst enhancing Vivo Energy’s portfolio in other important markets,” said Stan Mittelman, CEO of Vivo Energy.
“This is an exciting opportunity for Engen to build on its market leading position in South Africa and a number of southern African countries. It allows us to leverage our strong brand equity, leading retail footprint, extensive supply chain capability and unrivalled customer service to be a leading contributor to Vivo Energy and Vitol’s ambition to build a stronger and more successful pan-African energy champion. Engen is excited to become part of the enlarged business and this will set up our business to be stronger and more successful than ever before,” said Seelan Naidoo, managing director and CEO of Engen.