Vivo Energy Bets on Africa With $3 Billion IPO--Update
October 18 2017 - 9:40AM
Dow Jones News
By Ben Dummett
LONDON--Vivo Energy Investments B.V., a major licensee of Royal
Dutch Shell PLC's fuels and lubricants in Africa, is eyeing an
initial public that could value the company at more than $3
billion, according to people familiar with the matter.
The planned offering represents a bet that Africa's improving
economic growth prospects in part due to a rebound in commodity
prices and a growing middle class in parts of the continent will
help drive retail and consumer fuel demand.
Based in the Netherlands, Vivo distributes and markets
Shell-branded products across 16 African countries, including
lubricants and liquefied petroleum gas to customers in the
aviation, marine and mining industries. It also operates a network
of more than 1,780 fuel stations across the continent under the
Shell banner.
Africa's economy is expected to generate real economic growth of
3.7% in 2018, according to estimates from the International
Monetary Fund. In some of the countries where Vivo operates such as
Mali, Burkina Faso and Ghana economic growth next year is expected
to range between 5% and 8.9%, depending on the specific country,
according to the IMF.
Vivo is working with a group of global investment banks as
underwriters for the offering and is looking at the London Stock
Exchange for a listing, according to some of the people familiar
with the matter. Details about the issue's potential size couldn't
be learned, but it would likely value the entire company at more
than $3 billion, according to people familiar with the effort.
Vivo was created in 2011 after Shell sold the majority of its
downstream operations in 14 African markets for $1 billion to Vitol
S.A and Helios Investment Partners, a private-equity firm focused
on Africa. At that time, Shell retained a 20% stake but earlier
this year the company sold it to Vitol and Helios for $250
million.
A successful IPO by Vivo could spur other commodities traders
such as Trafigura Group Pte. Ltd. to take similar action.
Trafigura, along with Angola's Sonangol Holdings LDA, own Puma
Energy, a midstream and downstream energy company.
Vivo's planned offering comes amid a surge in IPOs in Europe as
companies and their owners seek to take advantage of strong equity
markets to raise new capital to fund growth plans and to reap some
of the profit from their holding.
In the third quarter, proceeds from European IPOs more than
doubled to EUR8.2 billion ($9.64 billion) from EUR3.8 billion in
the same period last year, according to PricewaterhouseCoopers
International Ltd., with the London Stock Exchange drawing the most
activity with 36% of all European IPOs. That share compares with
17% in the year-ago quarter that suffered from an uncertain market
climate following U.K.'s vote to split from the European Union.
The LSE, which is competing with the New York Stock Exchange for
a possible international listing of Saudi Arabian Oil Co. and its
massive IPO, is also benefiting from an influx of cross border IPOs
this year. Those include the $879 million IPO of Russian gold
producer Polyus PJSC in July and the listing earlier in the year of
Dubia-based ADES International Holding, a provider of onshore
energy drilling and production services company in the Middle East
and Africa, PwC notes.
Sarah Kent contributed to this article.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
October 18, 2017 10:25 ET (14:25 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Shell (LSE:RDSA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Shell (LSE:RDSA)
Historical Stock Chart
From Apr 2023 to Apr 2024