Julia Rwigamba

Distribution

Engen and Vivo Energy Join Forces to Create a Powerhouse in African Energy Distribution

In an exciting move, Engen and Vivo Energy have merged their African operations to form one of the largest energy distribution companies on the continent. With a combined presence spanning 27 African countries, the newly formed group will boast over 3,900 service stations and a storage capacity exceeding two billion liters.

Engen, renowned as a market leader in South Africa, operates around 1,300 service stations across seven African countries, while Vivo Energy is a prominent pan-African retailer and distributor of fuels and lubricants, with a network of over 2,600 service stations across 23 African countries under the Engen and Shell brands. Both brands are active in Tanzania as well.

As part of the merger, Petronas will divest its 74 percent shareholding in Engen to Vivo Energy, while the Phembani Group, Engen's long-standing partner in Africa and its B-BBEE (Broad-Based Black Economic Empowerment) shareholder, will retain a 21 percent stake in the South African business. Moreover, Engen employees will benefit from a newly introduced 5 percent employee share ownership program, resulting in 26 percent ownership by previously disadvantaged parties in Engen South Africa.

Stan Mittelman, the CEO of Vivo Energy, expressed pride in the growth achieved by the company since its establishment in 2011, having expanded its network twofold. He also highlighted the increased growth potential resulting from Vitol's acquisition of 100 percent of Vivo Energy the previous year. Mittelman believes that the completion of this transaction, reuniting the Engen brand across Africa, will mark a significant milestone in Vivo Energy's growth journey, signifying a strong commitment to the South African market while bolstering the company's portfolio in other important markets.

Seelan Naidoo, the Managing Director and CEO of Engen, emphasized the exciting opportunities presented by this merger, enabling Engen to build on its leading position in South Africa and several southern African countries. Naidoo cited Engen's strong brand equity, extensive retail footprint, robust supply chain capabilities, and exceptional customer service as key factors that will contribute to the success of Vivo Energy and Vitol's ambition to create a stronger and more prosperous pan-African energy champion. He expressed enthusiasm for Engen's integration into the expanded business, which will position the company for unprecedented success.

Phuthuma Nhleko, Chairman and Co-founder of the Phembani Group, expressed pride in their long-term partnership with Engen since 1999 and their role in helping the company grow into a valuable corporate entity in South Africa, catering to the needs of millions of ordinary citizens. Nhleko expressed confidence in the collaboration with Vivo Energy, foreseeing continued growth for Engen and the realization of its vision.

Chris Bake, Chair of Vivo Energy, hailed the success story of the company, highlighting its consistent growth through organic expansion and strategic investments in high-quality assets. Bake commended the highly skilled management team at Vivo Energy, which possesses an in-depth understanding of Africa's unique energy requirements. He emphasized that the powerful combination of Vivo Energy and Engen, with the latter's market leadership in South Africa, will yield benefits for customers throughout the continent.

While the transaction is still subject to regulatory approvals and the fulfillment of conditions precedent, Rand Merchant Bank, a division of FirstRand Bank Limited, and Standard Bank provided advisory services to Vivo Energy, while Morgan Stanley and Rothschild & Co served as advisors to Petronas in this transaction.

Written by Julia Rwigamba
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Source : The Citizen - Click Here >>>