RMB Fuelling Africa

MEDIA RELEASE

 This article was first published in Business Report on 24 May 2024

23 May 2024

Vivo Energy enters South African market through its combination with Engen and the help of RMB as joint financial advisor and mandated lead arranger.

 The combination of Vivo Energy and Engen’s business 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 in 2024 and represents a major vote of confidence in the South African economy and the fuel distribution business. 

“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,” says Krishna Nagar, Co-head of Corporate Finance for RMB.

The history of the transaction

In 2022, PETRONAS embarked on a competitive process to find a suitable buyer for its 74% shareholding in Engen, receiving a high degree of interest.

Ultimately, Vivo Energy emerged as the successful bidder, agreeing to an effective 74% acquisition of Engen with a reinvestment by Phembani for 21% in Engen’s South African business. In addition, a 5% employee share ownership programme (ESOP) will be implemented, bringing ownership in Engen South Africa by historically disadvantaged South Africans to a total of 26%. All regulatory approvals and conditions precedent have been met and the transaction is now effective. The acquisition of Engen is expected to compliment Vivo Energy’s existing portfolio after Vivo Energy acquired Engen Africa in 2019. This landmark transaction is characterised by its strategic significance for Vivo Energy, its transformative impact on Engen and its complex execution, distinguishing it as a standout deal in the energy sector.

RMB’s role in the transaction

RMB’s long-standing relationship with both Vitol and Vivo Energy led to the bank’s appointment as joint financial adviserjoint mandated lead arranger, underwriter and bookrunner on their acquisition bridge facility. The equity contribution from Vivo marked a significant investment in South Africa and was complemented by the deep pool of liquidity in the South African loan market. RMB was instrumental in supporting the transaction and partnered with Vitol, Vivo and Engen to ensure a successful outcome from providing strategic transaction advice and structuring, and providing, the debt funding required in all stages of the transaction, managing and executing the foreign exchange flows, the Financial Surveillance Department engagements and assisting Vivo Energy on other numerous and complex regulatory approval processes.

Krishna adds, “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 timeframe. 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.”

Unlocking benefits across Africa

Vivo Energy’s combination with Engen aligns seamlessly with the combined business’ strategic vision, solidifying its position as a key player in the African energy market. The deal strategically positions Vivo Energy and Engen to harness synergies across their businesses, capitalise on regional growth opportunities, and enhance overall market presence.

The acquisition significantly expands 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. The combination of Engen and Vivo Energy invites enhanced distribution capabilities, resulting in value creation not only for shareholders but for employees, customers and the communities served by Engen.

“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,” concludes Nagar.

ENDS