KenolKobil top shareholders to sell stakes to Swiss oil giant
KenolKobil chief executive Jacob Segman. KenolKobil on May 7, 2012 said its key shareholders have agreed to cede their shareholding to Puma Energy, which has roots in Central America. Photo/File
The majority shareholders of oil marketer KenolKobil are set to sell their shares to Switzerland-based oil firm in what highlights the increased deal making in Kenya’s petroleum market.
KenolKobil — which is associated with former powerful cabinet minister Nicholas Biwott- on Monday said its key shareholders have agreed to cede their shareholding to Puma Energy, which has roots in Central America.
The company said Puma Energy will help to sharpen its competitive edge in a region that is receiving increased interest from multinational oil dealers like Total through strategic input and cash injection.
“The directors of KenolKobil Limited… wish to caution its shareholders and the general public that they have been informed that the key shareholders of the company signed an Exclusive Agreement with Puma Energy for the sale of their majority shareholdings in KenolKobil,” said a statement from KenolKobil signed by Jacob Segman, the group managing director.
“The contemplated transaction is in line with the already expressed wish of management to drive the group to new highs and the next level of business development, with a strong strategic investor and partner like Puma Energy,” added Mr Segman.
The oil marketer said the deal was still at its formative stages and did not disclose the top shareholders looking to sell.
“Any sale of shares is subject to due diligence, regulatory approvals and price confirmation,” said Mr Segman.
Wells Petroleum Holdings is the single largest shareholder in Kenol with a 24.9 per cent stake, followed by Petrol Holdings (17.34), Chery Holding (7.8), and Energy Resources Capital with 5.99 per cent.
Kenol— which has operations in nine countries mainly in Eastern Africa—is looking to spread its reach in southern and central African markets, an expansion that will require heavy capital investments.
The marketer told the Business Daily in March that it was keen to acquire more assets in Southern Africa, adding that its expansion along the east African coast was aimed at making it a takeover target for an Asian or Middle Eastern firm.
KenolKobil first ventured out of Kenya in 1999, initially to Uganda and now operates in nine countries where it distributes and sells motor fuel, industrial oil and other petroleum products.
The company now makes more than 60 per cent of its profits from operations outside of Kenya and it hopes Puma Energy will hasten its expansion drive.
Puma Energy, which was formed in 1997 in Central America to develop a network of oil storage and distribution facilities, has more than 1, 100 retail outlets spread in 29 countries across Latin America, Middle East and Africa.
The deal comes weeks after the company that has operations in Namibia, Botswana and Tanzania signed a $260 million (Sh21.5 billion) credit facility.
It made its mark in Africa through the acquisition of BP African assets for £296 million (Sh39.6 billion) in 2010.
This earned it full ownership of BP’s Namibia and Botswana operations as well as its 75 per cent stake in BP Zambia and 50 per cent stakes in BP Malawi and BP Tanzania.
The entry of a strategic investor is expected to give Kenol a bigger financial and technical muscle to grow in the region.
Analysts say Kenol settled for multinational oil company that will not only provide the extra capital, but will also offer logistical and strategic input.
It has over the years funded its regional expansion from its retained earnings and borrowings, focusing on acquiring assets of existing oil companies.
The double digit returns seen in Africa is attracting more foreign investors seeking tie-ups with profitable firms on the continent as they turn their backs on developed nations where growth has slowed down on weak demand and sovereign debt crises.
Kenya Shell is to complete its sale to Nigeria’s PE fund Helios Investments and Vitol Holdings while the oil exploration front has witnessed acquisitions involving French oil giant Total and Tullow Oil.
Kenol's share price stood at Sh12.55 per share on Monday having gained 27 per cent in the past three months but analysts says the price is low given its strong performance.
“The company is undervalued and current shareholders can only sell their stakes by attaching a premium to the share price. A joint venture or creation of new shares is a more probable option," Eric Musau, an analyst at Standard Investment Bank told the Business Daily in a recent interview.
The company grew its net earnings by 71 per cent for the year ended December last year on the back of increased sales and higher fuel prices.
Its net profit stood at Sh3.2 billion compared to Sh1.9 billion the previous year as sales more than doubled to Sh222.4 billion.
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