Cnergyico board approves to acquire 57.3% stakes in Puma Energy

Ibn-e-Ameer

The Board of Directors of Cnergyico Pk Limited (formerly Byco Petroleum Pakistan Limited) has approved to acquire 57.37% stake in Puma Energy Pakistan Private Limited (‘Puma’).

The company management announced in a notice sent to Stock Exchange.

It said that in a meeting held on Thursday, (January 13, 2022) the board of directors had approved the acquisition of a 57.37% stake in Puma Energy Pakistan Private Limited (‘Puma’).

Puma Energy has more than 542 retail pumps across the Country with storage terminals in Punjab
(Machike) and Sindh (Daulatpur) with a total storage capacity of 10,500 MT for petroleum products.

Cnergyico having one of the largest refining capacities in the country after this acquisition would have
the second-largest retail fuel network, based on the current number shared by OMCs in Pakistan.

The management is optimistic that with this acquisition and expansion, the company’s business
diversity would further improve.

Cnergyico has become Pakistan’s Largest Private-Sector Fuel Retailer after acquiring Puma Energy Cnergyico Pk Limited (formerly Byco Petroleum Pakistan Limited), one of Pakistan’s leading petroleum companies and largest refinery is set to acquire a majority stake in Puma Energy Pakistan Private Limited (‘Puma’).

Cnergyico having one of the largest refining capacities in the country after this acquisition would have the second-largest retail fuel network based on the current number shared by OMCs in Pakistan.

In a meeting held on Thursday, Cnergyico Pk Limited’s Board of Directors has approved the acquisition of 57.37% shares of Puma Energy. Puma Energy runs 542 petrol pumps and owns two storage terminals in Machike, Punjab, and Daulatpur, Sindh that can together store up to 10,500 MT of petroleum products.

Besides raising the storage capacity, the acquisition will increase the total number of petrol pumps under Cnergyico’s network from 440 to 982 locations across the country in all major cities and highways. Cnergyico would be the supply backbone of the second-largest amassed retail network of fuel stations in Pakistan.

Mr. Amir Abbassciy, Chief Executive Officer – Cnergyico Pk Limited said that the acquisition of the majority stake in Puma Energy demonstrates our continued interest to further strengthen and diversify our business.

He further said that they had made a commitment to grow, modernize, and diversify our business and the takeover of Puma Energy will help support this strategic plan.

Cnergyico is the owner of Pakistan’s biggest oil refinery with an installed capacity of 156,000 barrels per day located in Hub, Balochistan.

Furthermore, the company owns a dedicated deep-sea oil terminal called Single Point Mooring (SPM) that is used to import oil for the refinery.

Impacts of Deal

Sherman Research said in a note that Puma Energy has total outlets of around 542 out of which 80% are located in northern areas. On the other hand, CNERGY has a total outlet of 432.

Thus after the acquisition, the company will be the largest OMC in the private sector beating Gas & Oil. After the acquisition, the company’s combined market share in the retail fuel business will increase to 5%.

Currently Puma Energy, despite being the seventh-largest OMC by retail outlets, has a lower market share of around 1.5% in retail fuels.

This is due to the liquidity constraints faced by the company over the last few years. Puma Energy has a storage capacity of around 10.5k tons (Machike & Daulatpur) of oil products which is relatively a smaller number but enough to store oil products for 14-15 days (lower than 20 days as prescribed by OGRA).

We believe that the new group will focus on storage so as to increase market share in the retail business.

Currently, CNERGY is operating in both the refining and OMC businesses. As per September 2021 un-consolidated accounts, OMC business has the largest share of 68% in total revenue of Rs34bn while the rest is contributed by refining business.

OMC business has contributed a major share in operating profits, however, the bottom-line remained at break-even as per our estimates. Going forward, OMC’s business is likely to improve after the recent hike in OMC’s margin by 23%.

Earlier, the board of directors of Cnergyico Pk Limited (CNERGY) formerly known as Byco Petroleum had shown interest to acquire Puma Energy Pakistan.

The board held a meeting on Tuesday and gave a green signal to the management to hold talks with shareholders of Puma Energy Pakistan (Private) Limited.

The company will acquire a majority stake in Puma Energy. The company informed in a notice issued to the stock exchange.

This is a plan of Byco Petroleum Pakistan Limited to buy Puma Energy, an oil marketing company, to expand its retail outlets’ operations.

The management of Byco Petroleum Pakistan Limited plans to buy Puma Energy to enhance retail outlets across the country following plans of upgrading the refinery.

It has also made a turnaround and has ambitious plans to set up up-gradation plants, but it also focuses on enhancing its retail outlet to capture market share.

Byco Petroleum has displayed strong growth by jumping up 4.5 times a year yearly to Rs 5.47 billion for nine months of FY21.

Byco is now in the final stage to acquire Puma Energy that consolidates its brands’ LP, Dippsa and Ello, under one brand name.

It also has a network of retail outlets across the country. Therefore, it will be an excellent addition to the existing retail network of Byco Petroleum Pakistan Limited. It also has a presence in six countries across the Americas and Africa, in addition to Pakistan.

It also supplies fuel to the aviation sector. During 2018, Puma Energy had added 13 more airports to its aviation portfolio and two new terminals in Panama and Colombia, bringing the total storage capacity to 7.7 million tons.

New Investment

IGCF Oil and Gas Limited has decided to offload 22 percent shares in Byco Petroleum Pakistan Limited. It has a total of 37 percent shares.

In the first phase, it has offloaded 9.8 percent shares out of 22 percent in the Byco refinery.

AKD Group has also bought a significant quantity of shares in recent shares in Byco Petroleum Pakistan Limited.

A local company has bought 308,522,000 shares out of a total of 522,825,000 shares IGCF Oil and Gas Limited has sold.

A mutual fund has acquired 52,855,000, brokers 37,235,000 and overseas 33,213,000 shares.

Earlier, IGCF Oil and Gas Limited, previously known as Abraaj Mauritius, one of Byco Industries Incorporated ( BII ) shareholders, has decided to divest 22 percent shares in Byco Petroleum Pakistan Limited.

As per arrangements agreed with IGCF, BII intends to divest up to 22% of BPPL, the company said in a Notification issued to Pakistan Stock Exchange.

After new investors are in now, they plan to invest multibillion rupees in upgrading the products. Recently, Byco is setting up furnace oil conversion plants that would be operational in 2024.

It is currently operating at 60 percent capacity due to furnace oil consumption in the country. After furnace oil conversion plants, it will be able to work at total capacity. Therefore, it needs a strong network of retail outlets. The acquisition of Puma Energy is also part of a plan to expand the network across the country to capture market share.