Listing could value petrol group at $4bn and break drought of Africa-related offerings
Vivo Energy, which operates petrol stations and retail outlets in 15 African countries, has announced its intention to next month list on the London Stock Exchange in a deal that could break a drought of Africa-related initial public offerings.
The listing, expected to value the company at $3bn-$4bn, comes after Helios Towers, an Africa-focused mobile phone tower operator, last month abandoned plans for an IPO because of weaker than expected investor appetite. Regional rival Eaton Towers is also considering dropping its listing, according to bankers.
It was announced just before Vitol Group, the oil trader that owns 55 per cent of Vivo, and private equity group Carlyle on Tuesday pulled the proposed listing of their joint-owned European refiner and petrol station operator Varo.
That flotation, on the Amsterdam stock exchange, was supposed to value Varo at €2bn and was dropped because of volatile market conditions. Christian Chammas, chief executive of Vivo Energy, said he could not comment on other listings but that Vivo was an Africa-focused petrol and retail operation that could not be compared with other businesses.
He positioned Vivo as offering international investors exposure to a diverse group of mostly fast-growing African economies with rapidly expanding urban populations. “We are at the heart of the growth story, the growth of Africa’s population and consumer demand,” he said.
The other big investor in Vivo, which was carved out of Shell’s African retail business in 2011, is Helios Investment Partners with a 44 per cent stake. Management owns 1 per cent. Under the IPO plans at least 25 per cent of the company will be floated. If the deal gets away successfully, it will mark the first significant listing of an African-based business since 2014, when Seplat, a Nigerian oil and gas group, raised $500m in a London-Lagos IPO.
Since then, the “Africa rising” narrative has sagged amid lower commodity prices and greater scepticism about the potential of countries from the continent to break decisively from poverty.
However, other African businesses are now preparing to list, bankers say, propelled by high demand for African debt offerings and more realistic valuation assumptions. Aliko Dangote, founder of Nigeria’s Dangote Group, told the Financial Times he was seeking at least two independent directors from Europe for his cement business ahead of an expected listing in London as early as this year.
He said he expected to float 10-15 per cent of the business, which operates in more than 10 African countries, and raise between $1.2bn and $2bn. Liquid Telecom, which supplies cable fibre lines across southern, central and east Africa, is also expected to seek a listing as early as this year.
“There are a number of companies that are considering coming to market,” said one banker with knowledge of the transactions. “There is interest from investors but there’s a high level of sensitivity to the quality of companies coming to market and the valuation they’re trying to attract.”
Mr Chammas said a listing was a next logical step for Vivo, which wanted to broaden its shareholding and allow Vitol and Helios to monetise part of their investment. “We don’t need cash today but this will enable us, in the years to come, to go to the market for future investments,” he said.
Vivo, which operates Africa’s biggest petrol station business after Total, is already in the process of expansion after a share transaction with Engen of South Africa. That deal, which is still going through the regulatory approval process, will reduce the business’s dependence on Morocco, which accounts for a quarter of sales, by adding nine countries to Vivo’s network and boosting the number of service stations from 1,800 to 2,100.
Vivo made earnings before interest, tax, depreciation and amortisation of $326m last year. Ahead of the listing, it appointed John Daly, chairman of drinks company Britvic, as non-executive chairman.