The private equity backer of Motor Fuel Group (MFG), one of Britain’s biggest petrol forecourt empires, is exploring the sale of a stake in a deal that could value it at about £7bn.
Sky News has learnt that Clayton Dubilier & Rice (CDR), which has built MFG from a mid-sized industry player over the course of more than a decade, is working with advisers to examine options for selling a large minority shareholding.
City sources said this weekend that CD&R was expected to run a process during the coming months, with a deal anticipated later this year.
A stake of roughly 25-30% is expected to change hands, although the final shape of any deal has yet to be determined.
A so-called continuation vehicle common in private equity transactions is understood to have been ruled out by CD&R.
MFG is now the largest independent forecourt operator in the UK, having grown from 360 sites at the point of CD&R’s acquisition of the company.
It trades under a number of brands, including Esso and Shell.
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Lazard, the investment bank, has been working with CD&R on the preparatory work for a minority sale.
CD&R, which also owns Morrisons, united MFG’s petrol forecourt businesses with that of the supermarket chain in a £2.5bn transaction which completed last year.
MFG now comprises roughly 1,200 sites across Britain, with pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) of about £700m expected in this financial year.
It is now focused on its role in the energy transition, with hundreds of electric vehicle charging points installed across its network, and growing its high-margin foodservice offering.
MFG has outlined plans to invest £400m in EV charging, and is now the second-largest Ultra Rapid player in the UK – which delivers 100 miles of range in ten minutes – with close to 1000 chargers.
It aims to grow that figure to 3000 by 2030.
Insiders said that CD&R would retain a controlling stake in MFG after any stake sale, while Morrisons also holds a 20% interest in the company.
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Bankers believe that a minority sale this year would be followed a couple of years later with an initial public offering on the London stock market.
CD&R invested in MFG in 2015, making its investment a long-term one by the standards of most private equity holding periods.
The sale of a 25% stake at a £7bn enterprise valuation would deliver a meaningful amount of liquidity to the US-based buyout firm.
CD&R has already been paid hundreds of millions of pounds in dividends from MFG, having seen its earnings grow 14-fold since the original purchase.
Morrisons’ rival, Asda, has undertaken a similar transaction, with EG Group acquiring the Leeds-based grocer’s forecourt network.
EG Group, which along with Asda is controlled by private equity firm TDR Capital, is now being prepared for a listing in the US.
CD&R declined to comment on Saturday.
