REFINERY HITS THE MARKET
Vitol to raise $2.5b through Viva Energy
VIVA Energy’s Geelong refinery is part of a big public float aiming to raise about $2.5 billion for its Dutchowned parent company Vitol.
The competitive advantages and sustainability of the refinery were yesterday hailed as Vitol prepares to sell up to 60 per cent of its Viva Energy business in Australia, which includes the refinery.
The company said shares would be listed between $2.50 and $2.65 apiece, bringing its total market value to between $4.86 billion and $5.15 billion.
Viva Energy chief executive Scott Wyatt said more than $300 million had been invested in the Geelong refinery since it had been acquired by global energy trader Vitol from Shell in 2014.
“It has been a strong contributor to our business and repaid the faith to our new owners,” Mr Wyatt said.
He said the refinery, the second largest in Australia, was an important part of the wider Viva business, which includes petrol stations and fuel terminals around the country.
“It has the highest complexity index ... or its upgrading capacity, which is usually how you make money in this business,” he said.
The refinery manufactures 10 per cent of the country’s total fuel demand and about 50 per cent of Victoria’s fuel demand.
Mr Wyatt declined to give an indication of the value for the local refining business.
He said significant capital investments in the refinery, including increasing crude storage capacity by 40 per cent, were indicative of Viva’s commitment to creating a sustainable refining business in Geelong.
While there was volatility in the refining side of the business, the refinery’s key com- petitive advantages helped to protect it. Those advantages include having local suppliers, producing a range of specialty products with added value, selling all its fuel within Victoria, and that it was relatively young for a refinery.
Mr Wyatt also said there was potential to improve production levels at Geelong.
The float will be Australia’s biggest initial public offering since the government’s float of Medibank Private in 2014.
Vitol is expected to retain a 40 per cent to 50 per cent holding in the business.