Nigeria’s integrated energy company, Oando Plc, has notified the Nigerian Stock Exchange (NSE) that it has entered into a definitive agreement with HV Investments II B.V (HVI) to sell 51 per cent of the voting rights and 60 per cent of the economic rights in its downstream business for $276 million.
HVI consortium is a joint venture owned by a fund advised by Helios Investment Partners and the Vitol Group, the world’s largest independent oil trader.The proposed acquisition is however conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments, including working capital.
Commenting on the proposed acquisition, the President and Chief Executive Officer of Vitol, Mr. Ian Taylor, stated that Vitol has a long history of working in Nigeria and is proud to have served its customers in the country for many years.“This investment is a further reflection of our confidence in the Nigerian economy, and will be independent of the services we provide to our long standing Nigerian customers.
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“We are looking forward to building this new downstream business, alongside our many other business activities in Nigeria,” Taylor added.Also commenting, the co-founder and Managing Partner of Helios Investment Partners Tope Lawani said: “This is a market leading downstream energy business with a strong brand and exciting growth potential.
“Given our successful partnership with Vitol to create Vivo Energy, a leading downstream business which distributes and markets Shell-branded fuels and lubricants in 16 countries across Africa, we are confident that our expertise and regional presence will support the management team in capitalising on its strong market position and the compelling growth opportunities in Nigeria.”On his part, the Group Chief Executive Officer of Oando Plc, Mr. Wale Tinubu, stated that the transaction was an exciting development in downstream West Africa.
“By working with Vitol, a global energy and commodities company and the largest independent trader of energy products, and Helios, a premier Africa-focused private investment firm, Oando Plc has repositioned Oando downstream for a new era of investment growth and profitability.
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“Importantly, the divestment enables Oando Plc to focus on its upstream and midstream businesses. Even as proceeds of the sale will be applied almost entirely to reducing Oando’s leverage, we underscore the portfolio rationalisation achieved alongside the balance sheet optimisation,” he added.
The Oando downstream businesses primarily consist of Oando Marketing Plc (OMP), a petroleum product retailing and distribution company with over 400 retail outlets and strategically located terminals in Nigeria, Ghana and Togo.
It is however anticipated that the service stations will retain the Oando brand.
OMP distributes petrol, diesel, kerosene, aviation fuel, low pour fuel oil (LPFO), lubricating oils, greases, bitumen and liquefied petroleum gas.
Key OMP subsidiaries that are part of the acquisition include Oando Ghana Limited, Oando Togo SA, and Clean Cooking Fuel Investments Ltd.Oando’s downstream businesses also include Oando Supply & Trading Limited (OS&T), a leading indigenous physical trader of petroleum products in the sub-Saharan region, supplying and trading crude oil and refined petroleum products.
OS&T trades large volume cargoes to major oil marketers and independent marketers in Nigeria.
Also included in the downstream businesses is Oando Trading Limited, Bermuda (OTB), which is an entity involved in the trading of crude oil and refined petroleum products in international markets.
Oando’s businesses also include Apapa SPM Limited, the marina jetty and subsea pipeline system capable of berthing large vessels that will increase the delivery capacity and offloading efficiency of petroleum products into major petroleum marketers’ storage facilities at Apapa, Lagos.
Also included in the proposed acquisition is Ebony Oil & Gas Limited, the Ghanaian supply and trading entity with a provisional bulk distribution company licence supplying white products.
Pursuant to the acquisition, a special purpose vehicle will hold 100 per cent of the economic interests, with HVI and Oando each having 49 per cent voting rights while a Nigerian Helios affiliate will have two per cent voting rights.
The total consideration of $461.3 million will be funded by a $276.8 million cash contribution from HVI and $184.5 million in preference shares issued to Oando Plc.
This is however subject to customary purchase price adjustments, including working capital and long-term debt.
At closing, HVI will own 60 per cent of the special purpose vehicle, while Oando Plc will hold a 40 per cent stake.
The new downstream and retail business will be established as a standalone, independent company, led by a local management team.
The new business will be the second largest downstream fuels company in Nigeria, with a market share of 12 per cent.
The consortium said it is committed to investing for growth, and working with the experienced and highly skilled local management team to enable the business capitalise on the three-five per cent per annum growth in Nigerian demand for oil products.
