Colony seals biggest ever African buyout

US private equity firm Colony Capital has agreed to buy oil refining and distribution company Tamoil from the Libyan government for €4 billion. It is the biggest private equity deal to date for an African-owned company – trumping Bain Capital’s $3.5 billion buyout of Edgars in February.

The government of Libya has agreed to sell oil refining and distribution business Tamoil to US private equity firm Colony Capital. A banking source confirmed that the deal is in the region of €4 billion ($5.4 billion).

Colonel Gaddafi: the leader of the Libyan government whose son identified Tamoil as a “burden”.

The Libyan government will keep a 35 percent stake in the company, which it has been looking to sell for some time.

The deal becomes the biggest buyout to date for a company owned by a Middle Eastern or African backer. It beats Bain Capital’s $3.5 billion buyout of South African retailer Edgars Consolidated Stores in February, and Dubai-based Abraaj Capital’s $1.41 billion (€1.04 billion) buyout of the Egyptian Fertilisers Company on Monday this week.

Based in Switzerland, Tamoil operates more than 3,000 service stations throughout Europe and owns refineries in Italy, Switzerland, Spain and Germany. The Libyan government hired BNP Paribas in October to manage a sale of the company after it was identified as a “burden” by Colonel Gaddafi’s son Seif Al-Islam.

It is understood that Colony trumped buyout rival The Carlyle Group, a regular investor in the energy sector, in the battle for Tamoil.

Colony is a private equity real estate firm founded in 1991. In recent years it has been one of the most active investors in the casino industry; in addition to investments in the Las Vegas Hilton, Resorts International and Kerzner International, it has also teamed up with the founding family of US gaming company Station Casinos to explore a potential $5.5 billion buyout.

Over the past year, the firm has also branched out into non-traditional deals, such as the purchase of a nine percent stake in French retailer Carrefour alongside entrepreneur Bernard Arnault and the acquisition of French football team Paris Saint Germain alongside Morgan Stanley and Butler Capital Partners.