Vitol & Helio's Investment Partners
A consortium led by Vitol and Helios Investment partners are negotiating with Shell to clinch the largest private equity deal in sub-Saharan Africa. This deal, which insiders say is worth close to $2.4 billion, will see one of Africa’s largest and fastest emerging private equity firms, and the world’s largest independent energy trader based out of Rotterdam, create one of the continent’s largest distributors of petroleum fuel and lubricants.
“This will be the largest deal outside of South Africa,” said a person close to the negotiation. “The deal has not yet closed, but is very near that stage.”
If it closes successfully, it will mark the beginning of a new era in which emerging financiers and entrepreneurs in sub-Saharan Africa find themselves winning the confidence of the establishment in global financial markets.
Vitol and Helios had confirmed on July 21st that they were in exclusive negotiations with Shell Oil Products Africa for the potential acquisition of equity in their downstream businesses in 19 countries in Africa, subject to final negotiations and any necessary regulatory and final company approvals.
Jimmy Mugerwa, Shell’s country manager for Kenya and sales and operations manager for East Africa, wrote to Peter Nyoike, Permanent Secretary at the Ministry of Energy on August 3rd informing him of the negotiations.
Under the terms of the proposed deal, the consortium will retain the Shell brand and products in each country. Vitol and Helios will become majority shareholders, with Shell as a minority sharehlder. This deal affects the retail fuel stations in 19 countries.
These countries are: Kenya, Uganda, Tanzania, Morocco, Tunisia, Egypt (excluding lubricants), Cote d’Ivoire, Burkina Faso, Ghana, Togo, Senegal, Mali, Guinea, Cape Verde, Botswana (excluding LPG), Namibia, Madagascar, Mauritius and La Reunion.
Shell said its fuel, lubricants, and refining activities in South Africa, its lubricant business in Egypt, its LPG businesses in South Africa and Botswana, and its exploration and production businesses, as well as its natural gas and international trading interests elsewhere “in Africa are not in the scope of this deal.”
While the deal has drawn some attention around the world, in Africa, it has been the catalyst of labour unrest. In Kenya, workers have sued for the right to be paid more generously than what the company is offering and want the transfer of shares blocked.
In Ghana, there have been threats of a strike over the same issue, and in Senegal, workers have taken to the streets protesting that they are not for sale.
The scope of the business on sale includes 1,300 retail sites, retail sales of around 3,500,000 cubic metres, and 1,200,000 cubic metres of terminal storage. There are around 2,500 employees currently employed in the various businesses in the 19 countries.
Helios is known in the region for the 25% investment in Equity Bank that helped transform this once tiny microfinance lender into the third largest bank in the region.
Source: PETROLWORLD - Wednesday, 3 Novemeber 2010