Shell, Huo’s Group and The Carlyle Group reach agreement on Tongyi stake
Aug 07, 2015
Beijing, 7 August 2015 - Shell has signed an agreement to sell its 75% stake in Tongyi Lubricants to Huo’s Group and The Carlyle Group. Subject to regulatory approvals, the transaction is expected to be completed by the end of 2015 or in early 2016.
Tongyi, a joint venture between Shell and Huo’s Group, is a prominent Chinese lubricants supplier with blending plants in Beijing, Xianyang of Shaanxi province and Wuxi of Jiangsu province. Shell acquired its 75% stake from Huo’s Group in 2006 and became the number one international lubricants supplier in China by share of supply, a position it still holds.
Carlyle’s equity investment for the transaction will come from Carlyle Asia Partners IV.
Xinsheng Zhang, Executive Chairman of Shell Companies in China, said: “Nine years ago when Shell acquired Tongyi, we began our win-win cooperation with Huo’s Group. By working together in partnership and cooperation, Shell and Huo’s Group have built Tongyi a strong brand with improved profitability and value proposition to customers in China.”
Shell Lubricants is expanding its business and market reach in China with established local technology and commercial centers that provide customized and timely support for distributors and customers around the country. Shell’s current focus is optimizing its lubricants portfolio and strengthening the Shell lubricants brands.
Huo Zhenxiang, Chairman of Huo’s Group, said: “Huo’s Group has been cooperating with Shell for nine years. I am delighted about the new development opportunity with Tongyi. Since I created this lubricant brand in 1993, with everybody’s great effort, Tongyi has become the No. 1 domestic private brand and company in China’s lubricants industry. The lubricants industry has a bright future in China. I am very confident that our cooperation with Carlyle will be another success story in the years to come.”
As a prominent domestic lubricants manufacturer and marketer, Tongyi has developed an extensive distributor network in China and the Tongyi brand has become a household name among many consumers in the country. These underpin the success of Tongyi and the company has experienced continuous profitable growth in recent years.
Herman Chang, Managing Director of the Carlyle Asia buyout team, said: “Carlyle's investments heavily focus on opportunities driven by the rising middle class in China. The lubricants industry is a growing market in China due to increasing auto penetration. Tongyi is well positioned to tap the market’s potentials with its strong brand, extensive nationwide sales network and experienced team. As a long-term investor, Carlyle will work closely with Mr. Huo and the Tongyi team to bring the company's success to the next level by leveraging our global resources and industry expertise.”
Carlyle has invested approximately $6.3 billion of equity in more than 80 transactions in China as of 30 June, 2015.
Notes to editor
About Shell in China
All Shell’s core businesses are operating in China and making good progress. These include Upstream, Downstream, Projects and Technology. Shell has onshore and offshore gas and oil development projects in partnership with PetroChina and CNOOC in and outside China helping to fuel the country’s fast growing economy.
Shell’s Downstream business in China has 12 joint ventures and 9 wholly-owned companies. Shell is the leading international lubricants provider as well as bitumen manufacturer and marketer in China. Shell has the largest network of gas stations among international energy companies in China operating about 1,100 refueling sites through joint ventures. In terms of manufacturing capacity, Shell has 5 lubricants blending plants, 1 grease plant and 5 bitumen plants. Shell also has a petrochemicals joint venture with CNOOC that operates the world class Nanhai complex in Huizhou, Guangdong province.
Shell’s clean coal technology is adopted by its joint venture with Sinopec in Yueyang, Hunan province and 21 other Chinese industry customers through licenses. The technology enables a clean use of China’s abundant coal in an environmentally acceptable way while reducing production cost.
Shell Energy (China) is a new addition to the Downstream businesses. It is Shell’s trading entity and has been actively engaged in the country’s burgeoning CO2 trade, bringing innovative and international practices to China’s newly launched carbon market.
About Huo’s Group
Huo’s Group, headquartered in Beijing and established in 1983, is one of the large conglomerates in China. After 32 years’ of fast growth, Huo’s Group now operates three main businesses: energy efficiency and renewable industry, modern warehouse and logistics, and financial services. Huo’s Group values the development of human resources and employs over 1,000 staff across China. The Group follows the steps of modern corporation management and has achieved fast and sustainable development. Huo’s Group’s purpose is to provide the China market with leading, reliable and competitive products and services.
About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $193 billion of assets under management across 128 funds and 159 fund of funds vehicles as of June 30, 2015. Carlyle’s purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Investment Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, real estate, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,700 people in 35 offices across six continents.
Phone: +86 10 65295484
Phone: +86 10 6028 0307
The Carlyle Group
Phone: +852 2878 5236
Phone: +86 10 5706 7070