Petrogas considers Applegreen flotation

Irish fuel group Petrogas is considering floating its Applegreen service station business on the stock market next year.

The Dublin-based company has been seeking to hire advisers in recent weeks and is believed to have held talks with Davy and Goodbody about filling this role.

It is understood Petrogas would seek to raise more than €100 million for a business that is in expansion mode following a financial restructuring last year. The company is thought to be eyeing a possible listing in the second quarter although market conditions would dictate the timing.

It is expected that UK advisers will also be appointed with the possibility of a dual listing in Dublin and London.

Petrogas was set up in 1992 by chief executive Bob Etchingham and Joe Barrett, its retail director. It has more than 140 forecourts dotted across Ireland and the UK and employs about 2,000 staff.

Service stations

In Ireland, Applegreen has more than 90 service stations, including a number of motorway sites, and operates as a franchisee of Burger King, Costa Coffee and Subway.

It is a major competitor here to Topaz, which is owned by Denis O’Brien and is the State’s largest fuel group. Topaz is seeking to bolster its position here with the acquisition of 38 Esso stations subject to regulatory approval.

Latest accounts for Petrogas Group Ltd show it made a pre-tax profit of just under €14 million on turnover of €394 million last year.

During the year, Petrogas refinanced its debt with Lloyds, repaid mezzanine debt and successfully purchased legacy debt from the liquidators of Irish Bank Resolution Corporation.

New long-term senior facilities were drawn down from Ulster Bank and AIB. The company’s year-end net debt/Ebitda (earnings before interest, tax, depreciation and amortisation) was described as a “comfortable” 1.8 times.

In a statement about the results, Mr Etchingham said: “Given the significant re-structuring in the international forecourt industry where traditional owners deconsolidate and depart downstream retailing and new openings emerge for specialist operators, there is a clear opportunity for companies with track record, expertise and capability to expand.”

Recently filed accounts for Applegreen Service Areas Ltd, which operates the company’s motorway stations, show it made a pre-tax profit of €1.7 million from turnover of €86.6 million.

Petrogas has been carefully building a growth story for Applegreen in recent times.

In July, the company announced the creation of 360 full-time jobs in Ireland through the development of six new service areas in 2014 and 2015 at a cost of €30 million. It also has four motorway stations planned for Northern Ireland at a cost of £25 million.

Growing network

In the UK, it has doubled its forecourt network in the past two years to 53. Earlier this month, Michael O’Loughlin, managing director of Petrogas UK, told trade publication Forecourttrader.co.uk: “We are already out in the market looking for the next 50, lease or freehold, we will consider everything. 2014 has been a fantastic year for Petrogas and we are all looking forward to 2015 for more of the same.”

It also recently established a foothold in the US with two stations on Long Island, New York. And it launched two new divisions this year, fuel cards and dealer-operated service stations.

In November, Mr Barrett told The Irish Times that the company could invest as much as €100 million expanding its network at home and abroad over the next three years. "We'll ramp it up over time," he said. No comment was available from Petrogas.