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PIC said to mull backing bid for Chevron's SA unit

Oct 11 2017 20:15
Paul Burkhardt and Loni Prinsloo, Bloomberg

Johannesburg - The Public Investment Corporation (PIC) is interested in taking part in the acquisition by Glencore and a group of black South African-owned companies of Chevron's assets in South Africa, according to three people familiar with the matter.

The PIC which manages the pension funds of South African government workers, could buy a portion of the business from Glencore or the minority owners, said one of the people, who asked not to be identified because the plans aren’t public.

The three parties could then raise cash by selling shares in the company on the Johannesburg Stock Exchange, the person said.

The PIC manages about R1.9trn trillion in assets and owns stakes in the majority of South African listed companies. The Chevron unit owns a 100 000 barrel-a-day refinery in Cape Town and more than 800 gas stations in the country and Botswana.

Chevron originally agreed to sell its 75 percent shareholding in the southern African business to China Petroleum & Chemical Corp. for $900m (about R12.2bn). However, the deal stalled after black-owned minority partners including African Legend Investments exercised a preemptive right on the stake. They brought in Glencore as an alternative buyer, and the Swiss trader agreed to the $973m (R13.1bn) deal on October 6.

The successful bid led by black investors aligns with the government’s aim to boost black participation in the economy that is dominated by white and foreign-owned businesses 23-years after apartheid.

Proposal Made

Glencore is interested in selling down the stake to reduce the size of its financial commitment, a person familiar with the matter said last week. The company intends to limit net capital expenditure across its oil business to less than $500m (R6.7bn) over the next 12 months, it has said.

The PIC said in a statement that, while it has been approached with a proposal to invest in Chevron, "no investment decision has been made”. 

Glencore and African Legend Investments declined to comment. Chevron and China Petroleum & Chemical Corporation didn’t immediately respond to emailed questions.


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