Petroliam Nasional Bhd (Petronas) has reached an agreement to sell its entire 74 per cent stake in Cape Town-based company Engen Limited to Vivo Energy. 

Petronas has been said to be planning to exit from the South African fuel retailer business Engen since 2020 including a sale or initial public offering. 

Petronas bought Engen in 1998 in a deal that valued the company at about US$700 million before selling a stake to Phembani.

The Phembani Group, Petronas’ long-standing partner in Africa and Engen’s Broad-Based Black Economic Empowerment (B-BBEE) shareholder, will remain a shareholder in Engen alongside Vivo Energy – one of the largest African fuel retail operators and part of multinational energy company Vitol.  

Petronas first acquired shares in Engen in 1996 and became its majority shareholder in 1998.

Engen’s primary business is in the marketing of petroleum, lubricants and functional fluids, chemicals and retail convenience services. It currently operates the largest retail footprint with around 1,300 service stations across seven countries in sub-Saharan Africa and the Indian Ocean Islands.

Petronas president and group CEO Datuk Tengku Muhammad Taufik recognised Engen as an important part of the group’s business portfolio for almost three decades. 

“While Peronas’ decision to step back and reshape its portfolio is driven by evolving business priorities, we fully appreciate Engen’s potential and acknowledge that this is a necessary move forward to further accelerate its growth. 

“With a strong foundation in place, we believe Vivo Energy will not only maintain sound operations for Engen, but also help steer the company through its next phase of growth,” he said in a statement today.

Engen will continue to execute on its strategy and remains focused on maintaining operational and commercial excellence both during the pre-completion period, and under the stewardship of Vivo Energy post-completion of this transaction. 

Petronas was advised by Morgan Stanley and Rothschild & Co. The transaction is subject to customary conditions precedent including regulatory approvals. –TMR