Billionaire brothers’ EG Group readies $13bn US IPO

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Private equity-backed petrol station company EG Group has fired the starting gun on a stock market listing in New York, expected to come as early as this year. 

The initial public offering, which could value the business at about $13bn, would allow TDR Capital to cash out some of its investment more than a decade after first backing Blackburn’s billionaire Issa brothers. 

Zuber Issa, who co-founded EG with his brother Mohsin but stepped back from management last year, told the Sunday Times newspaper that “the road map is starting now” on an IPO, expected to materialise this year or next, having considered various options for the group for some time.

EG would probably float under the name of Cumberland Farms, the American convenience-store operator that it bought in 2019, a person familiar with the matter confirmed.

The decision of two of the UK’s highest profile entrepreneurs and TDR to list their business in the US would be another blow for London’s stock market, which has been grappling with both a drought of new offerings and high-profile defections.

The brothers started out with one petrol station, near to where they grew up in Blackburn, Lancashire in 2001. They have expanded the business at breakneck speed to more than 5,500 sites in nine countries, partly through debt-fuelled acquisitions facilitated by their tie-up with TDR.

TDR and the Issas now own about 50 per cent each of EG.

Zuber said the choice of New York was driven by the fact that despite the business’s roots in northern England, more than half of its earnings were now in the US.

He also cited the presence of other listed rivals in North America, such as Canada’s Alimentation Couche-Tard and Nasdaq-listed Casey’s General Stores, which makes it easier for investors to benchmark performance. In 2022, there was speculation that Alimentation Couche-Tard and EG were in merger talks.

“If we had still had [the majority of] our assets in the UK, we would have had a much closer look at a UK IPO,” Zuber told the Sunday Times.

EG no longer has any UK convenience stores and petrol forecourts, after selling the bulk of them to the supermarket group Asda, a sister business also owned by TDR Capital and Mohsin.

EG, where Zuber remains a shareholder and non-executive director, delivered underlying profit of $1.1bn for the year to December 31 2023, on revenues of $28.3bn. It also cut its net debt burden from about $10bn in January 2023 to $5.3bn at the end of September last year.

Although the brothers only struck the deal to buy Asda from Walmart with TDR in 2020, Zuber sold his stake to the private equity group last year, formalising a split.

Zuber suggested that his reason for taking a step back from EG was driven by TDR’s desire to pursue an IPO at a faster pace than which he was comfortable. Mohsin now runs EG as sole chief executive.

“TDR has backed EG since 2014 and anything that EG decides [to do] is driven by the board and a decision the company makes,” a person close to TDR said.

“The notion this is shareholder driven is quite far-fetched. It’s not about an exit, it’s about setting the business up for [the] next stage of growth.” 

TDR and EG declined to comment.