Engen and Vivo Energy will combine their respective African businesses to create one of Africa’s largest energy distribution companies, the companies announced on Feb. 9. It expands on an existing working relationship, including Vivo’s distribution of Engen-branded lubricants throughout much of Africa.
The combined group will have over 3,900 service stations and more than two billion liters of storage capacity across 27 African countries. At the combination’s completion, Malaysia’s Petronas will sell its 74% shareholding in Engen to Vivo Energy. The Phembani Group, Petronas’ longstanding partner in Africa and Engen’s B-BBEE (Broad-Based Black Economic Empowerment) Shareholder, will remain a 21% shareholder in the South African business.
Lubricants and fuels supplier Vivo Energy in 2021 agreed to a $2.3 billion buyout by Netherlands-based energy trader and marketer Vitol Group. Vitol had been a shareholder in Vivo Energy since the latter’s creation in 2011 as part of Shell’s plan to sell downstream operations in Africa. Vivo originally was a joint venture amongst Vitol, Shell and London-based private equity firm Helios Investment Partners, which operated in Africa.
Helios and Vitol in 2017 purchased Shell’s stake in a deal under which the joint venture would continue supplying Shell lubricants across much of Africa. In 2018 Vitol and Helios conducted an initial public stock offering that sold 30% of stock shares in the joint venture.
Vivo Energy today is a major retailer and distributor of lubricants and fuels to retail and commercial customers, with more than 2,600 service stations across 23 African countries, using the Engen and Shell brands.
According to Vivo’s 2021 annual report, the company has access to around 158,000 metric tons of lubricant blending production capacity. Through a 50:50 joint venture with Shell, called SVL, Vivo has access to and operates blending plants in Morocco and Kenya, and has interests in blending operations in Tunisia, Cote d’Ivoire, Ghana and Guinea.
In the annual report, the company said it had secured retail license agreements with Engen until March 2034 and Shell until December 2031. The agreements give Vivo rights to use specified Engen and Shell brands for its products and services, including its service stations.
Vivo’s retail lubricants business involves the sale of products from its service station forecourts to retail customers and to other consumers through distributors. The company also sells commercial lubricants to customers across its operating units and exports to customers in other countries across Africa.
Stan Mittelman, CEO of Vivo Energy, said its focus has been to invest to grow its business, more than doubling the size of its network since its formation in 2011. “Four years ago, we acquired the Engen business in nine African markets, and have since worked to enhance and develop these,” Mittelman said in a press release. “Vitol’s acquisition of 100% of Vivo Energy last year brings more opportunity to grow even faster. Completion of this transaction, which reunites the Engen brand across Africa, will be a step change in our growth and represents a significant commitment to the South African market whilst enhancing Vivo Energy’s portfolio in other important markets.”
Seeland Naidoo, managing director and CEO of Engen said the combination was an opportunity for Engen to build on its market leading position in South Africa and a number of southern African countries. “It allows us to leverage our strong brand equity, including retail footprint, extensive supply chain capability and unrivalled customer service to be a leading contributor to Vivo Energy and Vitol’s ambition to build a stronger and more successful pan-African energy champion,” Naidoo said.
The transaction is currently pending regulatory approvals and fulfilment of conditions precedent.