£15bn petrol station giant EG woos investors with stake sale
Written by Rother Radio News on 12/11/2020
The petrol stations giant led by two brothers who have agreed to buy Asda for £6.8bn is to generate hundreds of millions of pounds by selling a stake in its holding company to a group of blue-chip global investors.
Sky News has learnt that EG Group could confirm as early as Wednesday that an Abu Dhabi sovereign investor and two of Canada’s largest pension funds are acquiring a minority stake.
The deal will value EG at more than $20bn (£15.1bn), including debt, according to an insider.
It will see the Alberta Investment Management Corporation (AIMCo) and PSP Investments become new shareholders in EG, while the Abu Dhabi Investment Authority (ADIA) will top up its existing stake in the EG holding company structure.
One source said the transaction would imply an equity value of more than $12bn (£9bn), paving the way for the company to stage a mammoth stock market flotation in the next couple of years.
The sale of an equity stake in EG will come just weeks after Mohsin and Zuber Issa – who founded the company in Lancashire just 19 years ago – unveiled the most significant deal of their career with the agreement to buy Asda from Walmart.
People close to EG said the addition of blue-chip shareholders to its investor base alongside TDR Capital, the London-based private equity firm which is jointly purchasing Asda, would vindicate its approach to managing its balance sheet.
The company is expected to unveil bumper quarterly results to bondholders on Thursday, which are expected to underline its resilience during the coronavirus pandemic.
The stake sale comes as EG moves to address recent concerns about corporate governance by strengthening its board.
Sky News revealed last month that the company was close to appointing John Carey, a former BP executive, as a non-executive director.
EG is also lining up another heavyweight independent director to chair its audit committee, while the recruitment of a non-executive chairman is also underway.
It recently emerged that Deloitte was stepping down as EG’s auditor, and would be replaced by KPMG, its fellow big four accountancy firm.
Together with TDR, the Issas have built EG into one of the world’s largest operators of petrol forecourts, with operations in ten countries and 44,000 employees.
The company is acknowledged in the industry as a pioneer in its approach to branded convenience retailing at its sites, a strategy which has generated industry-leading returns.
EG has expanded steadily through a string of debt-led acquisitions, and now operates approximately 6000 sites, serving 23 million customers every week.
Recent results showed a record performance for EG in terms of earnings before interest, tax, depreciation and amortisation.
Mohsin Issa, the co-founder and co-chief executive, said alongside the results: “To deliver such a strong performance in the third quarter, resulting in a record quarter of profitability for the Group, is testament to the resilience and differentiation of our best-in-class, diversified business model.
“Looking ahead, while the impact of tightening lockdown restrictions in a number of markets is yet to be fully seen, EG Group is strongly positioned to weather these external challenges and continue driving long-term growth across our global business.”
EG declined to comment on the stake sale, while ADIA also declined to comment.
© Sky News 2020