Shell expansion tipped as Viva aims for $1 billion float

Acquisition and expansion activity by major fuel groups is accelerating following reports that Bank of America Merrill Lynch and Deutsche Bank have been appointed as joint lead managers on a $1 billion-plus float of Viva Energy – the exclusive distributor of Shell branded fuels and lubricants in Australia.

Viva Energy this week flagged a major expansion of its retail network, fuel supply and Geelong refinery operations.

Viva Energy’s float is believed to be pitched as a petrol station real estate investment trust listing and according to the Australian Financial Review is to take place in the second half of 2015, comprising a $500 million offer with a market capitalisation higher than $1 billion.

The move comes hot on the heels of the Chevron’s 50% exit from Caltex Australia, which Caltex sees as an opportunity to pursue acquisitions; United Petroleum’s reported marketing of the $1 billion business to potential investors, and Puma Energy’s aim of doubling its national footprint of 300 petrol and convenience stores.

Chief executive of Viva Energy Scott Wyatt said that it plans to double the rate of network growth, increase its market share and gain more fuel supply business nationally through the Shell retail banner and under the joint venture with Coles Express.

“Viva Energy expects to invest $1 billion during the next five years to improve our refining business, expand our supply capability and develop our customer offering,” the company said.

“Of the planned $1bn investment, about a third will be directed to the Geelong Refinery to support major turnarounds as well as targeted investments in improving operations and growth; a third will go towards improving our supply chain around the country; and the final third will go towards building our service station network and presence in regional Australia. The acquisition of a non-controlling stake in Liberty is a good example of how we are investing in growth.”

Viva Energy businesses include the Shell Geelong refinery and more than 20 terminals across the country that supply around 870 petrol convenience sites, of which 650 are Coles Express sites.

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