First up was MFG which already had a profile in the City due to the partnership between its management and private equity group Patron Capital in ownership of the business. Having Scottish oil tycoon Alasdair Locke as chairman of the company will also have put it on the radar of city institutions.
MFG announced that private investment firm Clayton, Dubilier & Rice, (CD&R) would be partnering with the management of MFG to acquire the company from its original institutional investor, Patron, in a transaction valued at approximately £500m. The transaction is expected to close this month, subject to customary regulatory approvals.
When the MFG management team partnered with Patron in 2011 to acquire the MFG business, it was ranked fifth in the Forecourt Trader Top 50 Indies with 58 sites. Today, it is ranked second. Through a series of strategic acquisitions, Patron and MFG management grew the company to its current total of 373 stations operating under the BP, Shell, Texaco and Jet brands. In addition, MFG also operates the Murco-branded dealer network of more than 200 sites. In April 2015, MFG was also ranked ninth in a league table of Britain's one hundred private companies with the fastest-growing profits in the 16th annual Sunday Times BDO Profit Track 100.
Jeremy Clarke, managing director of MFG, said: "We thank Patron for helping us to become one of the largest, most dynamic and profitable independent petrol and convenience retail operators in the UK and we are excited to be partnering with CD&R. The firm's reputation for operational excellence and deep consumer and retail experience will be especially useful as we move the business forward to the next stage of profitable growth.
"We are also delighted that Sir Terry Leahy, a senior advisor to CD&R's Funds, former chief executive of Tesco and current chairman of B&M European Value Retail, will be joining the MFG board." Leahy was chief executive of Tesco, the UK's biggest retailer, between 1997 and 2011 as it grew its UK market share from 20% to 30% and expanded overseas to become the world's third largest retailer. He was also credited with devising and implementing the Tesco Clubcard loyalty scheme prior to being appointed to the board.
Stephen Green, senior partner at Patron, commented: "We have been delighted with our investment in MFG. Together with the management team and Alasdair Locke, we have succeeded in taking a complex property-backed business, driving operational efficiencies and rapidly transforming the company into a stable, profitable operating platform with potential for future growth.
"The success of MFG one of our largest investments to date and a highly profitable one highlights the strength of our strategy of investing opportunistically in property-backed investments across Western Europe."
"MFG is a well-positioned, growing and cash-generative business in a stable industry with an improving competitive environment that favours independent operators," said CD&R partner David Novak. "Alasdair Locke and the strong MFG management team have created a valuable portfolio of petrol and convenience retail outlets which we intend to further enhance and expand."
Fellow CD&R partner Marco Herbst, added: "We look forward to building on MFG management team's success by continuing to accelerate the company's transformation into a best-in-class petrol and convenience retailer."
Alasdair Locke, who will remain chairman of MFG, commented: "We thank the Patron team for helping us become one of the largest, most dynamic and profitable independent petrol and convenience retail operators in the UK, and we are delighted to be partnering with CD&R. The firm's reputation for operational excellence and deep consumer and retail experience will be especially useful as we move the business forward to the next stage of profitable growth."
The second major deal in the sector during June came with the flotation of Irish company Applegreen plc, which owns forecourt sites in both the UK and Irish Republic. In late May Petrogas announced that it intended to float with the aim of raising £50m to fund expansion of the business and upgrades of existing sites. It also revealed that it was renaming the company, using its Applegreen brand name instead, so Petrogas Global Limited became Applegreen plc.
The placing of the shares exceeded the target, raising £66.9m, and on June 19 the shares began trading on the junior ESM market in Dublin and the AIM in London, giving the company a market capitalisation of £218.8m.
The Irish company currently employs around 2,200 staff and has 96 sites in the Irish Republic, and was ranked fifth in the Forecourt Trader Top 50 Indies with 54 UK sites. It also owns two sites in Long Island in the US. Last year the head of its UK arm, Michael O'Loughlin, was crowned Retailer Champion of the Year at the Forecourt Trader Awards.
Bob Etchingham, CEO of Applegreen, said: "Along with the rest of the management team I am delighted to announce the successful completion of our IPO and our first day of trading as a listed company. We are very pleased with our list of new institutional shareholders. Their support provides further endorsement of our strategy and our growth prospects.
"The funds raised will provide us with the platform to accelerate our growth across the markets in which we operate and further expand and rebrand our portfolio of sites. We look forward to embarking on the next step in the company's journey as a public listed company and generating significant value for our new shareholders."
When the company announced its intention to float, Etchingham said: "We believe there are significant opportunities for expansion across the Republic of Ireland and the UK. Applegreen is a leading retail petrol forecourt operator, with a proven track record of significant growth through the recession and has built a strong brand and consumer offer that is compelling, profitable and highly cash generative.
"The group is well positioned to benefit from recovering economic growth and increased disposable income in the Republic of Ireland and the UK, as well as favourable market trends as the oil majors exit the forecourt market.
In its statement the company said the proceeds of the flotation would be used to fund:
· an upgrade and rebrand up to 70 sites across the group's network of sites in Ireland and the UK;
· to accelerate expansion in Ireland and the UK which currently stands at about 20 sites a year both by number of sites and by geography;
· to develop new service area sites in Ireland and the UK; and
· to take advantage of other opportunities that may arise including building a platform for growth in the US and opportunistic acquisitions of portfolios of sites that may become available.
Rapid growth by the major dealer groups has attracted investors, but this has largely been fuelled by the acquisition of sites sold by the oil companies Applegreen is the exception among the top five of the Top 50 Indies in not having engaged in any of the major deals. With Esso now having sold its entire estate, Shell having slimmed down its holding and BP looking to increase the number of its partnership sites with M&S Simply Food, the era of major sell-offs looks to have ended. As the groups integrate their recent acquisitions and adapt to fewer opportunities for new purchases it remains to be seen whether the market will still appear so attractive to investors.
An era of growt
Over the past three years the growth of the biggest dealer groups, largely through acquisition of sites from the oil companies, has been plotted by Forecourt Trader's Top 50 Indies. In its 2012 edition the top five had an aggregate of 783 sites and only the top two were into three figures. By 2015 that figure had swelled to 1,119, with four of the top five well over the hundred mark and MRH top with 385 sites.
But even that does not tell the full story as there has been a final surge of sell-offs following publication of the 2015 Top 50 Indies. In March Esso announced the deal for its final 201 sites with Euro Garages taking 104, MRH 78 and Rontec 19. This was followed in April by Shell's announcement that it was selling 90 sites to MFG (it has since added one more) and 68 to Euro Garages.
This means the top five now own 1,479 sites, almost twice as many as three years ago, and MRH (site below) is still top with more than 460.