Nigeria: Helios and Vitol acquire equity stake in Oando’s downstream businesses

LAGOS, Nigeria (Capitla Markets in Africa) — A consortium comprising Helios Investment Partners (“Helios”, acting on behalf of funds it advises) and The Vitol Group (“Vitol”) (together, the “Consortium”) today announced it has reached an agreement to acquire 60 per cent of the economic rights and 51 per cent of the voting rights in the West African downstream business of Oando Plc, an integrated oil and gas company headquartered in Nigeria, for a sum of circa US$276 million, subject to the receipt of regulatory approvals and customary purchase price adjustments, including working capital.

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. The Consortium is committed to investing for growth, and working with the experienced and highly skilled local management team to enable the business to capitalise on the 3-5 per cent per annum growth in Nigerian demand for oil products. It is anticipated that the service stations will retain the Oando brand.

Pursuant to the Acquisition, a special purpose vehicle will hold 100% of the economic interests and 49% of the voting rights of Oando Downstream.

The total consideration of US$461.3 million will be funded by a US$276.8 million cash contribution from the Consortium and US$184.5 million in preference shares issued to Oando Plc, subject to customary purchase price adjustments, including working capital and long-term debt. At closing, the Consortium will own 60% of the special purpose vehicle, while Oando Plc will hold a 40% stake.

Commenting on the transaction, Wale Tinubu, Group Chief Executive (GCE) of Oando Plc stated, “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, Oando Plc has repositioned Oando Downstream for a new era of investment growth and profitability. 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 rationalization achieved alongside the balance sheet optimization.”

In addition, Ian Taylor, President and CEO, Vitol 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.”

Tope Lawani, co-founder and Managing Partner of Helios Investment Partners, 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.”