Oando Plc will sell a 60% economic interest, as well as 51% of the voting rights, in its downstream businesses to HV Investments II (HVI) for $276-million. This is a seismic shift in business strategy for a company that prides itself as an “integrated service solutions provider”. The Oando downstream businesses primarily comprise petroleum product retailer and distributor Oando Marketing; petroleum products trader Oando Supply & Trading; crude oil and refined petroleum products trader Oando Trading; Ghanaian supply and trading entity Ebony Oil & Gas; and Apapa SPM – a marina jetty and subsea pipeline system. HVI is a joint venture between Africa-focused investment firm Helios Investment and energy trader Vitol Group.
Pursuant to the acquisition, a special purpose vehicle (SPV) would hold 100% of the economic interests and 49% of the voting rights of Oando Downstream. HVI would own 60% and Oando 40% of the SPV. The sale proceeds are largely meant to pay off the remaining debt incurred in the course of acquisition of ConocoPhillips’ equity in four acreages onshore Niger Delta between late 2012 and mid 2014. “The divestment enables Oando to focus on its upstream and midstream businesses.
Even as proceeds of the sale will be applied almost entirely to reducing Oando’s leverage, we underscore the portfolio rationalisation achieved alongside the balance sheet optimisation,” says Oando CEO Wale Tinubu.