Greenergy eyes its options for greater growth
Low-profile business with high turnover seeks ways to expand its 20 per cent fuel market share
Sunday 04 September 2011
Greenergy, the UK's third-biggest private company by turnover, has asked investment banks to look at its growth options over the next three years.
Banks have been pitching for the role through the summer, with the winners expected to be picked this autumn. Greenergy would want them to assess whether options including a stock market flotation or capital raising would raise sufficient money to take the business beyond its current 20 per cent market share of the petrol fuel supply market.
The business was widely expected to gear up for flotation when Paul Lester, the former chief executive of support services group VT, joined as chairman last year. However, the 19-year-old group made just £17m profit off a turnover of more than £9.8bn in the 2010/11 financial year. This means that the group would struggle to get the stock market valuation that the company believes it is worth.
However, industry sources suggested that Greenergy would be worth at least £500m should it pursue the flotation. The selected bank or banks would not be looking at the business's immediate plans, rather what it should do in two or three years' time.
"Greenergy is talking to a number of investment banks, as it is in the process of getting in advisers to look at strategic options for the business," said one source.
Greenergy is relatively unknown in the UK, despite being part-owned by supermarket giant Tesco and supplying 10bn litres of diesel, petrol and biofuel every year. Most of its petrol tankers are branded with their clients' logos.
Despite its low profile, Greenergy's turnover is greater than that of popular retailer John Lewis Partnership, international construction group Laing O'Rourke, and betting and gaming operator Gala Coral. Ineos, the £19.6bn turnover chemicals manufacturer, and private equity-owned pharmaceuticals retailer Alliance Boots are currently the only bigger privately owned companies in the UK.
To support rapid growth, Greenergy has invested heavily in new fuel storage terminals in recent years, including Plymouth in 2009, Teesside in 2010 and Cardiff this year. This takes the total number to 19, which also includes locations in Belfast, Nottingham and Clydeside. The group is now looking at a rail distribution network, with Teesside as the hub.
Chief executive Andrew Owens and non-executive director David Rees co-founded Greenergy in 1992. The Owens family owns nearly one-third of the business.
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