Dutch Multinational SHV Energy has taken over entire stakes at Petromax LPG Ltd and Petromax Cylinders Ltd for more than Tk1,000 crore to enter the fast-growing liquefied petroleum gas (LPG) market of Bangladesh.
The deal was closed on 22 August, according to a statement by HSBC Bangladesh, which supported the inbound foreign direct investment (FDI) and financed the acquisition.
Neither the parties nor the bank disclosed the deal value.
But, two persons with direct knowledge of the deal said it was around a $100 million deal, which converts into over Tk1,000 crore, considering the prevailing exchange rate.
Declining the request to comment on financial details of the deal, Hasan Imam Siddiki, head of group finance at Petromax's parent Youth Group, told The Business Standard, "This is the first time in the history of the country's LPG industry that a foreign entrant completely acquires a local venture."
Starting LPG bottling business in 2018, Petromax LPG Ltd, with its 6500 MT LPG storage facility, ascended to the fifth spot with around 6% share in the local LPG market in terms of volume, he said.
The other company, Petromax Cylinders, has a single-shift capacity to manufacture 5 lakh LPG cylinders a year at its Mirzapur Tangail plant, according to Siddiki.
SHV Energy, present in 24-25 countries across four continents, aims to "make clean and safe energy options accessible and affordable to as many customers and companies as possible," reads the HSBC statement.
It also said SHV believes in the untapped high-growth potential of the Bangladesh LPG market as the country is slowly transitioning to cleaner fuel like LPG from the current scenario of widely-used polluting fuels.
In recent years, SHV Energy has acquired LPG businesses across markets, including the USA, Italy, Brazil and also the Asian region.
"Petromax is a relatively new yet already one of the key players in this growing LPG market," it added.
HSBC Bangladesh Chief Executive Md Mahbub ur Rahman said, "This agreement is a significant indicator of the growing inbound foreign investments in Bangladesh. It is also a reflection of the strong economic foothold that Bangladesh is gaining in the global energy arena."
"We are delighted to close the acquisition, strengthening the deeply rooted relationship with our group customer and thrilled to witness a large international player like SHV Energy acquiring domestic operations," he added.
Bangladesh LPG market and Petromax
Amid the abundance of local natural gas that the government has long been supplying through grid lines, Bangladesh LPG market had been scratching the surface till the early 2010s.
As soon as the declining proven reserve of natural gas took over the discourses then, the government came up with its policy that prioritised LPG as cooking gas and in the last one decade, the LPG market has grown tenfold to over 13 lakh tonnes a year.
The market is predicted to grow to 30 lakh tonnes by the end of 2030.
Of the 26 LPG companies, 21 are already active in the market, including some joint ventures, such as Omera, Total Gas, Aygaz LPG, BM Gas, LAUGFS, Beximco LPG.
Bashundrara, Omera, Jamuna, BM, JMI, Petromax are the leading players, who control around two-third of the market.
Sena, JMI, Uni Gas, Delta LPG, Orion Gas, G-Gas, Bengal, Fresh, Navana are among the LPG brands backed by large local conglomerates.
SHV Energy is planning to take over Petromax operations in September this year with an ambition to be the third largest player in the market, according to a July, 2022 media interview of Massih Niazi, CEO of SHV Energy Bangladesh.