Downstream: Chemical Engineering: Acquisition of African Assets

A privately held midstream and downstream fuels marketing company (company) owns fuel storage terminals, marine loading facilities, refineries and trading operations that support commercial and retail fuel sales in emerging markets throughout the world.  The company initially entered the African downstream sector in 2002 and has since rapidly expanded throughout sub-Saharan Africa.

The company’s acquisition of southern African marketing businesses in 2010 consisted of shareholdings in five separate business operations in Botswana, Malawi, Namibia, Tanzania, and Zambia.  Business activities included ground fuels, aviation fuels, and lubricant marketing operations.  Across the five operations, 11 fuel storage terminals, 188 retail service stations, and 22 airport operations were acquired.  The acquisition presented an opportunity for the company to strengthen its presence on the continent by creating a more robust supply chain.

The company engaged Opportune to provide an independent assessment of the value for the five southern African marketing businesses.  The purpose of the valuation was to allocate the total purchase price across the five marketing businesses acquired. Opportune organized a team of consultants with extensive experience in asset valuation, refined product markets, and downstream operations to complete the engagement.  Opportune provided an estimate of the value of each business based upon revenues generated by the businesses and the fair market value of tangible and intangible assets.  The method of comparable market transactions using guideline public companies was not used due to a lack of comparable transactions.

Successful completion of the engagement required not only analysis and forecasting of operating margins and assessment of tangible asset values, but also in-depth understanding of African commercial and retail fuels markets, local regulatory and operating conditions, country-specific risk and overall cost of capital. Opportune’s consultants were able to leverage their experience in international operations to provide a thorough assessment of value on a very short timeline and without extensive travel costs.

Our consultants have assisted with many successful transactions throughout the world. We have been involved with transactions related to petroleum refineries, refined products terminals, retail marketing, and distribution networks. We have confirmed the retrospective performance of existing assets as well as provided our clients with forecasts of future performance considering the local and regional business outlook and any required capital investment.  For more information, click here.