As part of its strategy to exit non-core operations, the Royal Dutch Shell has agreed to sell its majority shareholding in its downstream African business for $1 billion.
Shell will sell 80 percent of its stake to Helios Investment Partners – an Africa focused private equity group and Vitol – the world’s largest oil trading company and will continue to hold the remaining 20 percent stake in a joint-venture to operate its distribution and retailing business in the continent’s 14 countries, with the option of adding five more countries in the future.
“This is a good deal for our customers as well as for Shell”, said Shell’s downstream director Mark Williams.
Another company – owned 50 percent by Helios Partners and Vitol and the remaining 50 percent by Shell, will be floated to manage the macro-distributor relationships in every country the main JV would operate and also take control over the company’s lubricant blending plants in seven different countries.
“We will significantly reduce our capital exposure in line with our strategy to concentrate our global downstream footprint”, said Mr. Williams.
Supporting his views, the managing partner of Helios, Mr. Tope Lawani said: “Combining Vitol’s world class supply expertise and Helios’ deep understanding of the African operating environment with the Shell brand will create significant new growth opportunities”.
Shell managed to raise $7 billion by selling non-core assets in 2010 and plans to raise another $5 billion in 2011.
Shell’s exploration and production businesses, Liquefied Natural Gas assets and international trading deals in Africa were not part of the deal. The deal covers downstream businesses in Egypt, Morocco, Kenya, Mauritius, Tunisia, Ghana, Senegal, Uganda, Madagascar, Mali, Guinea, Cape Verde, Cote d’Ivorie and Burkina Faso.