Indigenous energy group, Oando Plc, has declared divestment of equity stake in Oando Marketing Plc, its downstream business arm, to HV Investments for a gross financial consideration of $461 million.
HV Investments is a joint venture owned by Helios Investment Partners and The Vitol Group, and the partial acquisition is conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments including working capital.
Under the terms of the deal which is expected to close shortly after receiving regulatory approval, HVI and Oando would each have 49% voting rights and a Nigerian Helios Affiliate 2% voting rights. Head, Corporate Communications, Ainoije ‘Alex’ Irune, stated in a release that total consideration of US$461.3 million would be funded by a $276.8 million cash contribution from HVI and US$184.5 million in preference shares issued to Oando PLC, subject to customary purchase price adjustments, including working capital and long-term debt.
Oando prides itself as Nigeria’s leading indigenous firm with largest integrated energy solutions group in sub-Saharan Africa. The company is listed on the Nigerian Stock Exchange and the Johannesburg Stock Exchange respectively. Group CEO of Oando Plc, Mr. Wale Tinubu, declared: “This partial equity agreement presents a unique opportunity for a significant growth in the size and scale of our operations, while substantially strengthening our position in the Downstream sector.
Though we employ a multifaceted approach across the energy value chain, we have immense pride in our origins as a predominantly downstream company, and we had no reason to sell, as our brand deeply resonates with many in Africa and globally.”
Mr. Tinubu had in 2014 pointed at the probability of a shift in the company’s strategy to reduce debt, diversify into the higher margin upstream, and increase growth margin value for shareholders through an augmented production portfolio and cash flow He dropped the hint during a mid-year teleconference with investors and analysts to announce the conclusion of Oando’s $1.56 million acquisition of Conoco- Phillips Nigerian assets.
On the current deal, Mr. Tinubu stated: “This transaction is an exciting development in downstream West Africa. By working with Vitol, a global energy and Commodities Company and the largest independent trader of energy products, and Helios, a premier Africa-focused private investment firm, Oando Plc has repositioned Oando Downstream for a new era of investment growth and profitability. Importantly, the divestment enables Oando Plc to focus on its upstream and midstream businesses.