Motor Fuel Group-owner plots sale of stake in £7bn petrol retail empire | Money News

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.

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.

A previous attempt by CD&R to sell the company in 2022 was derailed in part by Vladimir Putin’s invasion of Ukraine and a deteriorating macroeconomic environment.

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 10 minutes – with close to 1,000 chargers.

It aims to grow that figure to 3,000 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.

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 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 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.