The investment giant Apollo Global Management is close to snapping up a stake in Motor Fuel Group (MFG), one of Britain’s biggest petrol forecourt empires, in a deal valuing it about £7bn.
Sky News has learnt that Apollo could announce as soon as Thursday that it has agreed to buy a large minority stake in MFG from Clayton Dubilier & Rice (CD&R), its current majority-owner.
The transaction will come after several months of talks involving CD&R and a range of prospective investors in a company which is rapidly expanding its presence in the electric vehicle charging infrastructure arena.
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Banking sources said there had been a “large appetite” to invest in the next phase of MFG’s growth, with CD&R having built the company from a mid-sized industry player over the course of more than a decade.
Lazard and Royal Bank of Canada are understood to be advising on the deal.
A stake of roughly 25-30% in MFG has been expected to change hands during the process, with Apollo’s investment said to be broadly in that range.
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MFG is 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.
CD&R, which also owns the supermarket chain Morrisons, united MFG’s petrol forecourt businesses with that of the grocer in a £2.5bn transaction, which completed nearly 18 months ago.
MFG now comprises roughly 1,200 sites across Britain, with earnings before interest, tax, depreciation and amortisation (EBITDA) of about £700m anticipated 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 1,000 chargers.
It aims to grow that figure to 3,000 by 2030.
CD&R, which declined to comment on Wednesday afternoon, will 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 expect that the minority deal with Apollo will 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.
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The sale of a large minority stake at a £7bn enterprise valuation will crystallise a positive return for the US-based buyout firm.
CD&R and its investors have 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 its petrol forecourts, 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.
Apollo declined to comment.
