HV Investments II B.V. (HVI) is set to acquire 60 percent shares of Oando Plc’s downstream businesses for about US$276 million. This development is, however, subject to regulatory approvals and customary purchase price adjustments, including working capital.
Ainoije Alex Irune, Head, Corporate Communications, Oando Plc, said HV Investments is a joint venture owned by a fund advised by Helios Investment Partners and the Vitol Group.
Oando downstream businesses 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. OMP distributes premium motor spirit, automotive gas oil, dual-purpose kerosene, aviation turbine kerosene, low pour fuel oil, 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 Limited.
Other downstream businesses include Oando Supply & Trading Limited, an indigenous trader of petroleum products in the sub-Saharan region, supplying and trading crude oil and refined petroleum products, Oando Trading Limited (Bermuda), an entity involved in the trading of crude oil and refined petroleum products in international markets, 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 and Ebony Oil & Gas Limited, the Ghanaian supply and trading entity with a provisional bulk distribution company licence supplying white products.
The total consideration of US$461.3 million will be funded by a US$276.8 million cash contribution from HVI and US$184.5 million in preference shares issued to Oando Plc. At closing, HVI will own 60 per cent of the special purpose vehicle. Oando will hold a 40 per cent stake.
Wale Tinubu, Group Chief Executive Officer, Oando Plc, described the transaction as “an exciting development in downstream West Africa.” He explained that by working with Vitol, a global energy and commodities firm, and the largest independent trader of energy products, and Helios, a premier Africa-focused private investment firm, they have repositioned Oando Downstream for a new era of investment growth, profitability, and 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 optimization,” he said.
By Dike Onwuamaeze