In 2010, Morrison & Co purchased the downstream oil assets of Shell NZ on behalf of the NZ Super Fund and Infratil (50/50 ownership) and rebranded the company as Z Energy.

Overview

At the time of Infratil’s exit in 2015, Z Energy’s included 12 storage and terminal facilities around New Zealand, oil pipeline infrastructure, a fuel logistics network, sourcing and inventory management of 2,600m litres of crude refined product per anum, 213 service stations and 100 truck stops nationwide, specialist fuel facilities for aviation, marine and commercial users, a 17.1% interest in the NZ Refining Company and a 25% shareholding in a market-leading retail customer loyalty scheme.

  • In April 2010, Morrison & Co purchased the downstream oil assets of Shell NZ on behalf of the NZ Superannuation Fund and Infratil (50/50 ownership) for NZ$697m (5.2x EV/EBITDA multiple) with a $420m equity stake

  • In August 2013, Morrison & Co through an Initial Public Offering conducted a partial sell down (60%) on behalf of both NZ Super and Infratil for NZ$3.50 per share with a market capitalisation of NZ$1,400 or an 8.1x EV/EBITDA multiple. 

  • In September 2015, Morrison & Co arranged the sale of Infratil's remaining 20% shareholding and half of NZ Super's shares

  • Infratil had invested $210m and received back $1,033m in interest, dividends and share proceeds, providing a 48% IRR.


Investment rationale and strategy

Morrison & Co recognised the changing industry structure as favourable for an infrastructure specialist owner independent of the global oil majors and an opportunity to participate in a low tension bid process due to the operational complexity of the asset and market volatility at the time following the GFC. Morrison & Co saw the potential for responsiveness to capital investment and potential to improve the market position.

At the time of acquisition a new executive team supported by the secondment of Morrison & Co specialists was put in place to manage the transition and implement the post-acquisition strategy. Post-acquisition the team managed the establishment of new treasury, procurement and risk corporate functions and the rebranding exercise from Shell to Z Energy. Subsequently Z Energy developed a business strategy of seeking investment and growth opportunities to take advantage of the retrenchment model of competition. It also installed more efficient product procurement and refining arrangements.

In August 2013, Morrison & Co through an Initial Public Offering conducted a partial sell down (60%) on behalf of both NZ Super and Infratil. The IPO was priced at NZ$3.50 resulting in an equity value of NZ$1,400 (8.1x EV/EBITDA multiple). Z Energy debuted up 6% to NZ$3.72. The partial sell down generated NZ$840m in proceeds plus dividends of NZ$226m. In September 2015, Morrison & Co on behalf of Infratil sold its remaining 20% shareholding for NZ$6.00 per share which resulted in a 48% IRR based on an original NZ$210m equity investment with NZ$1,033m in cash returned. NZ Super sold a 10% share at the time of Infratil’s exit, retaining a 10% shareholding.