Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
ADNOC Distribution has tied up with South African investment group Reatile Group as a local partner in Shell Downstream South Africa (SDSA), which it proposes to acquire from Shell South Africa Holdings.
In a stock market disclosure signed by Bader Saeed Al Lamki, Chief Executive Officer, ADNOC Distribution said: “The company entered into a definitive agreement pursuant to which Reatile Group will acquire a minority interest in SDSA following completion of ADNOC Distribution’s proposed acquisition of SDSA from Shell South Africa Holdings.”
The disclosure said the partnership with Reatile Group affirmed ADNOC Distribution’s commitment to South Africa’s Broad-Based Black Economic Empowerment (B-BBEE) policies while contributing to the country’s long-term economic priorities, including local participation, energy security, job creation and sustainable value creation.
ADNOC Distribution announced in July that it proposed to acquire 100% of SDSA at an implied enterprise value of about $1 billion, with the acquisition to be debt financed. The transaction is expected to become effective in 2027, subject to regulatory approvals and other closing conditions.
At the time of announcing the transaction, the company said it planned to sell down a 28% stake after completion to a local empowerment partner and an employee share ownership plan (ESOP), in line with South African regulations. ADNOC Distribution said it would ultimately retain a 72% majority stake in SDSA.
The latest disclosure, which identifies Reatile Group as the local partner, does not specify the size of the stake Reatile will acquire or how the previously announced 28% sell-down will be divided between Reatile and the ESOP.
The financing structure announced in July envisages a combination of ADNOC Distribution’s financing resources, South African rand-denominated non-recourse debt at SDSA level and local partner financing.
SDSA operates a network of 580 fuel retail sites and is South Africa’s third-largest fuel distribution player by network size, according to ADNOC Distribution. Retail accounts for 71% of its volumes, while corporate and aviation businesses account for 18% and 11%, respectively.
The company also owns and operates six terminals and has freehold ownership of about half of its retail sites.
Reatile Group founder and chairperson Simphiwe Mehlomakulu welcomed the partnership, according to a South African media report.
“Our partnership with ADNOC Distribution represents a significant milestone for Reatile Group and reflects the confidence placed in our 23-year track record of investing in, operating and growing energy businesses across South Africa,” Mehlomakulu was quoted as saying.
He said combining ADNOC Distribution’s global expertise and financial strength with Reatile’s local market knowledge and industry relationships would support the continued growth of SDSA and contribute to South Africa’s energy security and economic development.
Reatile Group is a diversified investment holding company focused on the African energy sector and has a 23-year track record of operating and growing energy businesses alongside major energy companies in South Africa and globally, according to the ADNOC Distribution disclosure.
