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Oando sells downstream business for $276m

By on July 2, 2015

A consortium of investors on Tuesday announced the acquisition of 60 per cent of the economic rights and 51 per cent of the voting rights in the downstream business of Oando Plc, an integrated oil and gas company, for a sum of $276m.

A statement issued by Adeshola Komolafe of Media Insight, consultants to the consortium, named the consortium members as Helios Investment Partners and The Vitol Group.

She said the consortium had reached an agreement to acquire Oando’s downstream businesses subject to the receipt of regulatory approvals and customary purchase price adjustments, including working capital.

Komolafe said, “The new downstream and retail business will be established as a standalone independent company led by a local management team.

“Its assets will comprise over 400 service stations in Nigeria with supporting infrastructure, including 84,000 tonnes of storage and a newly built inbound logistics jetty; as well as complementary businesses, chiefly LPG filling and distribution, lubricants and an interest in a supply and bulk distribution company in Ghana.

“The new business will be the second largest downstream fuels company in Nigeria, with a market share of 12 per cent.”

It is anticipated that the service stations will retain the Oando brand, she added.

Speaking on the deal, the President and Chief Executive Officer, Vitol, Mr. Ian Taylor, said, “Vitol has a long history of working in Nigeria and is proud to have served our customers here over 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.

“We are looking forward to building this new downstream business, alongside our many other business activities in Nigeria.”

The Co-founder and Managing Partner, Helios Investment Partners, Mr. 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.”

Oando confirmed the transaction in a statement on Tuesday, saying that the total consideration of $461.3m would be funded by a $276.8m cash contribution from HVI and $184.5m in preference shares issued to Oando Plc, 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 will hold a 40 per cent stake.

Commenting on the partnership agreement, the Chief Executive Officer, Oando, Mr. Wale Tinubu, said, “This transaction is 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, we have repositioned Oando Downstream for a new era of investment growth and profitability.

“This venture holds unprecedented opportunities for the business. Importantly, this divestment also enables us to increase our focus on our 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.”

 

[Punch]