Bank of America Merrill Lynch and Deutsche Bank have been appointed as joint lead managers on the $1 billion-plus float of Viva Energy, sources told Street Talk on Monday.

Viva Energy is the rebadged Australian business of London-based Royal Dutch Shell which was acquired by crude oil trading giant Vitol for $2.9 billion in February 2014.

While Vitol bought Shell’s 870 petrol stations, the Geelong refinery and parts of the chemicals, lubricants, bulk fuels and bitumen businesses, it’s believed only a portion of the assets will be included in the listing.

The float’s expected to be pitched as a real estate investment trust with investors asked to look at indicative yield, gearing, weighted average lease expiry and net asset backing per share.

Sources said the petrol station REIT’s listing would take place in the second half and would comprise a $500 million offer for a market capitalisation north of $1 billion. The enterprise value is expected to be well in excess of $1 billion.

It’s understood the JLM appointments were made following a beauty parade a fortnight ago.

The fuel distribution industry in Australia has had a massive re-rating over the last three years as investors have applied retail industrial multiples to companies which were previously only viewed as volatile refiners and distributors.

The doubling in the Caltex share price ahead of the sale of Chevron’s half-ownership was a necessary wake-up call for those who had viewed the sector with disdain.

Vitol is coming to the market at a time when Caltex CEO Julian Segal is talking a very big growth story. Whether the Vitol business can ride on the back of the Caltex re-rating remains to be seen.


Extracted in full from the Australian Financial Review.