Zuber Issa has made a rare public intervention after suggesting that EG Group, which operates around 5,600 sites across Europe, Australia and the US, should sell off its American forecourts rather than IPO to settle its debts.
EG Group is 50% owned by TDR Capital, with the remainder of the business split equally between Zuber and Mohsin Issa, who sit on the firm’s board as non-executive directors.
EG Group’s US sites are thought to be worth over $5bn (£3.7bn), while its net debt stands at $5.3bn, and revenue last year was $24.2bn. The firm is believed to be preparing to float the entire business in New York, the Financial Times reports, but in an interview with the paper Zuber Issa said selling its American forecourts would be an alternative route to consider.
“There are people who want to buy the US assets,” Issa told the FT, adding that a sale “will be an auction process which would get to a clear end goal much quicker and we can pay the debt off.”
The Financial Times says that while an IPO would allow TDR Capital to begin exiting its investment, a sale of EG Group’s US forecourts would be an alternative route to the firm making good on its debt obligations – and it is this route that Issa believes should be explored.
“The shareholders are still thinking about the options”, he told the paper, adding: “Other options would be trying to sell the US in its entirety. And I think that should be an option we should do”.
He went on to explain that the existence of comparable rival businesses in the United States would make valuation straightforward. EG Group’s American forecourts made $449m last year, just under half the firm’s profits.
Turning to the separate company EG On The Move, which operates roughly 150 forecourts and a further 250 or so retail locations in the UK, Issa told the FT he wants the company to grow to five times its current size, and is considering a European expansion.
“The plan [is to] leave a legacy behind for the family who hopefully will take on and run this business going forward,” he told the paper. “I’m a great believer in ‘stick to what you know’.”
He ended the interview with a note of caution over private equity (PE), and debt-based expansion. “One of the things which we’ve learned . . . is that it’s quite easy to borrow the money, but as interest rates go up there is always going to be a squeeze on free cash.”
He added: “If you want to have the growth of PE and . . . you want an exit at some time, that’s really good, [but] when . . . you want to keep it in the family, then private equity is not for you because you will lose control”.
