Certas Energy is the latest name to join the ranks of firms owned by private equity, a deal that will see investors also gain the Pace brand, plus fuel-supply contracts for over 1,200 UK forecourts.
The deal comes with the board of Certas owners, Irish firm DCC Energy, accepting a £5.75bn takeover bid from private-equity outfits Energy Capital Partners, and KKR.
Certas Energy owns and operates 71 forecourts itself, with 41 of these being unmanned sites. The firm is also the fuel supplier for over 1,200 UK forecourts including 307 Gulf sites and 85 Pace outlets. Certas owns Pace, and has the UK licence to the Gulf brand.
The scale of Certas’ UK operations means that once the buyout is signed and sealed, around 14% of UK petrol stations will be supplied by a private-equity-controlled firm.
ECP is a US investment house founded in 2005 by three former Goldman Sachs executives, while KKR is one of the world’s biggest private-equity firms, with $758bn (£569bn) worth of investments.
In addition to its forecourt focus Certas, which has been approached for comment, also operates a heating-oil arm, a number of HGV bunker refuelling sites and has been quietly building up its portfolio of truck stops, while earlier in the year it launched its own EV charging brand, Evolo.
The buyout underscores the attractiveness of fuel retailing to private-equity firms, and follows MFG’s acquisition by US investment house Clayton Dubilier Rice in 2015, while fellow PE outfit TDR Capital has a 50% stake in EG Group.
Being acquired by private equity brings fresh cash for companies to expand or can boost the fortunes of ailing firms, with the business model typically focused on short-to-medium-term gains, and investors expecting returns within five to 10 years. Detractors of the private equity model argue it can see firms loaded with debt, sold off piecemeal, or services decline as cost-cutting measures are introduced.
The deal means parent firm DCC will be the latest major company to be delisted from the London Stock Exchange, a trend that has led to concerns over the UK losing its status as a centre of global finance.
Mark Breuer, the chairman of DCC Energy comments: “The board believes the consortium’s offer represents a compelling opportunity for shareholders to crystallise value in cash at an attractive premium to DCC Energy’s historical trading price.”
