The private equity backer of Motor Fuel Group (MFG), one of Britain’s largest petrol forecourt empires, is considering selling a stake that could value it at around £7bn.
Sky News has learned that Clayton Dubilier & Rice (CDR), the private equity firm behind MFG’s growth, is working with advisors to explore options for selling a significant minority share.
Sources in the city have indicated that a sale process is likely to take place in the coming months, with a deal expected to be finalized later this year.
The sale is expected to involve a stake of approximately 25-30%, although the exact details of the deal are still being worked out.
CDR has ruled out the use of a continuation vehicle commonly seen in private equity transactions.
MFG has now become the largest independent forecourt operator in the UK, expanding from 360 sites at the time of CDR’s acquisition of the company.
It operates under various brands, including Esso and Shell.
Lazard, the investment bank, has been assisting CDR with the preparations for the minority sale.
CDR, which also owns Morrisons, recently merged MFG’s forecourt businesses with those of the supermarket chain in a £2.5bn deal completed last year.
MFG currently has around 1,200 sites across the UK, with expected earnings of about £700m in the current financial year.
CDR’s previous attempt to sell the company in 2022 was disrupted by geopolitical events, but the firm is now focused on the energy transition, with a significant investment in electric vehicle charging infrastructure.
MFG plans to invest £400m in EV charging, aiming to become a major player in the UK’s Ultra Rapid charging market, with plans to expand to 3,000 chargers by 2030.
CDR is expected to maintain a controlling stake in MFG even after the stake sale, with Morrisons holding a 20% interest in the company.
Bankers believe that a minority sale could be followed by an IPO on the London stock market in a couple of years.
CDR initially invested in MFG in 2015, making it a long-term investment for a private equity firm.
A 25% stake sale at a £7bn valuation would provide significant returns for CDR and its investors.
CDR has already received substantial dividends from MFG, and the company’s earnings have grown substantially since the initial acquisition.
Similar transactions have been seen in the industry, with Asda’s forecourt network being acquired by EG Group, also controlled by private equity firm TDR Capital.
EG Group is now preparing for a listing in the US.
CDR declined to comment on Saturday.