Background, Sourcing, Business

In July 2014, JZI Fund III, L.P. and a co-investor jointly committed approximately €100 million to Petrocorner, a build-up in the Spanish retail petrol station market. JZI was responsible for the roll-out of the project, which required significant hands-on involvement to purchase petrol stations one-by-one.

Investment Rationale

  • Fuel consumption in Spain decreased by 20% during the economic recession; acquisition prices of petrol stations subsequently decreased from approximately €1.00 to €0.60 per liter. Both consumption and acquisition prices were expected to improve in a market upswing.
  • We believed that Petrocorner could increase its fuel margin by up to ~40% by renegotiating fuel contracts based on higher volumes and eliminating fixed margin contracts. Such improvement would be made possible by changes in regulations and management expertise.
  • Implementation of a targeted non-oil strategy could substantially increase non-oil sales from 6% of revenue (year 1).
  • Very senior and experienced management team, capable of meeting the significant challenge of simultaneously acquiring and integrating a large number of petrol stations (largely one-by-one) while continuing to increase sales. JZI worked very closely with management to successfully achieve this goal.

JZI Value-Add

  • In February 2016, Petrocorner secured a credit facility of €40 million with local Spanish banks.
  • In July 2017, Petrocorner closed a €97.5 million credit facility with ING and Santander, including a €22.5 million distribution to shareholders.
  • The Property Company holding Petrocorner’s real estate assets was transformed into a Real Estate Investment Trust (“REIT”) in September 2015, creating a tax efficient vehicle which was listed on the Mercado Alternativo Bursátil (Spanish exchange for small and medium sized businesses) in July 2017.
  • Prior to being sold to BP, Petrocorner acquired a total of 65 petrol stations, largely on very favorable terms made possible by labor intensive one-by-one negotiations.
  • In September 2017, JZI mandated ING to run a limited sale process which ended in the sale of 100% of Petrocorner’s Operating Company and Property Company businesses to BP.