Rand Merchant Bank (RMB) yesterday said Vivo Energy’s acquisition of Engen South Africa’s operations aligned seamlessly with the combined businesses’ strategic vision and would solidify its position as a key player in the African energy market.
RMB said the combination of Engen and Vivo Energy invited enhanced distribution capabilities, resulting in value creation not only for shareholders but for employees, customers and the communities served by Engen.
RMB’s co-head of corporate finance, Krishna Nagar, said the deal strategically positioned Vivo Energy and Engen to harness synergies across their businesses, capitalise on regional growth opportunities, and enhance overall market presence.
Nagar said the acquisition significantly expanded Vivo Energy’s footprint into southern Africa, providing it access to new markets and reinforcing its commitment to serving diverse communities across the African continent.
“We are excited that this groundbreaking transaction has been concluded. The combination of Vivo Energy and Engen’s businesses is set to create one of Africa’s largest energy distribution businesses,” Nagar said.
“We’re proud to partner with Vivo Energy on this transaction and are delighted to continue to support the new group’s vision to become Africa’s leading energy business.”
British-headquartered Vivo Energy enters the South African market through its combination with Engen and the help of RMB as joint financial adviser and mandated lead arranger.
The combination of Vivo Energy and Engen’s businesses has been completed with Petronas selling its 74% shareholding in Engen to Vivo Energy, creating a pan-African energy champion.
This landmark transaction is one of the largest closed so far this year and represents a major vote of confidence in the South African economy and the fuel distribution business.
Nagar said this transaction has been complex, given the cross-border nature and associated regulatory matters.
“With multiple local and international parties being involved, we needed to agree terms within a short time frame,” he said.
“Our agility, commitment, innovative thinking and deep understanding of the various businesses combined with our partnership with Vitol, the Vivo Energy and Engen teams, resulted in the successful navigation of this strategically important and complex transaction, through to implementation.”
On Wednesday, the Department of Trade, Industry and Competition and Vivo Energy signed the public interest commitments agreed as part of the transfer of ownership of the Engen business in South Africa.
The provisions of the agreement contain significant commitments that have been made conditions of the sale.
At least R10 billion will be spent in new investment commitments, potentially rising to R14bn.
It also involves some 30% transformation ownership, including 2 100 workers obtaining 9% of the shares in the company.
There will be at least R100bn of estimated purchases of oil being made from local refineries, R240 million in funding to the Localisation Support Fund and R1bn in new local procurement over the next five years.
BUSINESS REPORT