Essar Group Acquires SGN Retail to Add 118 UK Petrol Stations
Essar Group has bought UK petrol station operator SGN Retail, which has 118 outlets, to add to its existing fuel retail network. The acquisition will see Essar Energy Transition Retail’s UK petrol stations increase to 235 as the firm seeks 800 locations by 2031.
The Essar Group of India has bought out SGN Retail, a petrol station operator in the United Kingdom. According to the company's announcement on September 14th, 118 sites would be added as part of Essar's plan to increase its petroleum retail network to 800 stores by 2031. Essar Energy Transition Retail (EET Retail) has announced that it will increase its number of petrol stations operated by 235 with this acquisition.
A division of Essar Energy Transition Fuels, EET Retail runs the UK's Stanlow refinery, which has a capacity of 200,000 barrels per day. According to Arvan Ruia, CEO of EET Retail, this acquisition speeds up Group's aim to establish a vertically integrated platform with 800 outlets around the country. The platform will be supported by direct supply from refineries and will offer competitive petrol pricing to drivers in the UK.
Essar Transforming its Business Strategies in UK
Essar has stated its intention to disrupt the UK fuel retail system, which it claims has grown disconnected due to fuel production and selling. The fundamental reason for this is that big oil companies have reduced their spending in domestic refineries. As a result, the supply chain becomes complicated and inefficient, with reliance on imports or complicated domestic processes. In order to ensure a strong and efficient supply to clients in the UK, EET Retail plans to combat this dynamic, according to the statement.
Furthermore, the release mentioned that domestic supply security is enhanced by rerouting refined fuel from Stanlow straight onto EET Retail forecourts. This allows for more efficient distribution of UK refined petroleum to consumers within the UK. Additionally, EET Retail will be able to remove cost inefficiencies for drivers at the pump through the integration of fuel production and sale. Its target market is the forecourt industry in the United Kingdom.
An appealing investment outlook exists in the UK due to demographic expansion, the increase of multi-car families, and the decline of forecourts, according to Essar. With 118 locations, SGN Retail is among the largest independent petrol station chains in the United Kingdom. Graham Peacock and Susan Tobbell started it in 2016.
Specifics of the Deal
The exact amount that Essar paid for SGN Retail remains a mystery; however, estimates put the value of the company at over £400 million. Cash and a new £250 million senior loan facility were negotiated by a group of banks that includes First Abu Dhabi Bank, Macquarie Bank, Natixis, OakNorth Bank, Royal Bank of Canada, SMBC Bank International, and Sound Point Capital Management; the remaining funding will come from other sources.
Legal counsel from Herbert Smith Freehills Kramer and Weightmans and financial advice from RBC Capital Markets were provided to EET Fuels and EET Retail. This is a once-in-a-lifetime opportunity that advances a fundamental aspect of our merger and acquisition strategy, according to Viral Gathani, Head of Strategic Transactions at Essar Energy Transition. Group's backward-integrated growth model and the UK fuels and convenience sectors are backed by a top-tier consortium of banks spanning four continents. Among them, some are lending to the UK forecourt sector for the first time, added Gathani.
