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  •  WAFI Energy to own 77.42pc in Shell Pakistan, Saudi Aramco to take 40pc stake in Gas & Oil Pakistan Limited
  • Papara plans to buy out 100pc of EMI SadaPay
Wafi Energy to buy Shell Pakistan

WAFI Energy LLC, a prominent company in the fuel station sector in Saudi Arabia, has expressed its intent to acquire 77.42 per cent ownership in Shell Pakistan Limited. WAFI Energy is a rapidly expanding network of retail gas stations and holds the exclusive license for the Shell Retail Network (gas stations) in Saudi Arabia.

WAFI Energy was established in 2012 with an authorised and paid-up capital of 3 million Saudi riyals. Shell Petroleum (Shell plc), one of the world’s preeminent oil and gas conglomerates, had declared its intention to relinquish its stake in Shell Pakistan, its subsidiary in Pakistan. At that time, Shell Pakistan emphasised that the transition would not affect its ongoing business operations, which would continue as usual. Shell’s divestment strategy aligns with Chief Executive Officer Wael Sawan’s efforts to enhance returns to shareholders and shed businesses that were not meeting profit expectations.

In July 2023, Pakistan Refinery Limited (PRL) and Air Link Communication issued separate notifications to the PSX, declaring their intention to acquire control of Shell Pakistan. Reports also emerged that Saudi Aramco was exploring a potential bid for Shell Plc’s Pakistan business. Earlier, Prax Overseas Holdings Limited (Prax), a UK-based company, has expressed its intention to acquire a controlling stake in Shell Pakistan Limited.

Saudi Aramco’s investment in GO

Saudi Aramco, one of the world’s leading integrated energy and chemicals companies, is set to enter Pakistan’s fuel retail market after it signed agreements to acquire a 40 per cent stake in Gas & Oil Pakistan Limited (GO). Saudi Aramco’s acquisition of GO, a diversified downstream fuels, lubricants, and convenience store operator, represents the company’s maiden venture into the Pakistani fuel retail sector.

The strategic investment aims to strengthen Aramco’s downstream value chain internationally and provides GO with a significant boost in the competitive market. GO is recognised as one of the largest retail and storage companies in Pakistan, offering a diversified portfolio of services. The deal is contingent upon customary conditions, including regulatory approvals, and aligns with Aramco’s strategy to expand its downstream operations globally. This move follows Aramco’s acquisition of Valvoline Inc.’s global products business in February 2023, and the planned acquisition of GO is expected to secure additional outlets for Aramco’s refined products and open new market opportunities for Valvoline-branded lubricants. Experts are hopeful that this injection of FDI will also help Pakistan with its ongoing foreign reserves and balance of payments crises. Saudi Aramco’s foray into the Pakistani downstream oil sector is also expected to bring about transformative changes, introducing global expertise and innovative solutions to the market. The deal underscores the strategic importance of Pakistan in Aramco’s international growth trajectory.

GO is the largest retail outlet operator in Pakistan in the private sector with 1,200 outlets. Its oil storage depots and terminals across the country can hold approximately 200,000 MTs of fuel. A second upcountry storage network and a fleet of 800 tank trucks equipped with satellite tracking systems, ensure round-the-clock deliveries to its retail outlets. In 2020, GO also became the first OMC in Pakistan to introduce Electric Vehicle Chargers at its outlets. It has the largest network of Company Owned Company company-operated (COCO) retail outlets in Pakistan and has a strong network of fueling stations on the M4 and M5 motorways. Aramco plans to supply fuel to GO based on their supply exclusivity and utilisation of storage capacity, introduce its Valvoline range of lubricants in Pakistan, and launch Aramco-branded retail outlets, enhancing GO’s standing in the market. The company expects to deliver on this plan in early 2024 to embark on the next phase of its growth.

Papara’s 100pc investment

The EMI business model is not considered a lucrative line of business as they are focused mainly on e-commerce and point-of-sale transactions and earn primarily from a transaction fee, which is typically 1 per cent. This is the reason why many players have already exited the market like TAG, Finja, Paymax etc. In this backdrop, Papara, a Turkish fintech company, which has made a similar model work in the home country, now plans to buy out 100 per cent of EMI SadaPay. The acquisition will not alter the corporate or operational fabric of SadaPay Pakistan Limited, and the entire SadaPay team including people in the management, and directors would be retained.

Brandon Timinsky, the founder and the current CEO, will continue serving as the company’s chief executive. The company will maintain its strategic course under the new ultimate beneficial owner (UBO), the Turkish fintech company Papara. The size of the deal is expected to range between $30 million to $50 million. Following the acquisition, Papara has planned an immediate $10 million injection into the Pakistani entity for expenditures on technological advancements and market expansion to solidify Sadapay’s position as the leading EMI. The acquisition and the investment is expected to provide an impetus to SadaPay’s plans of moving into the remittance business for expatriate Pakistanis in the UK and Saudi Arabia. 

Established in 2016, Papara is a fintech subsidiary of PPR Holding A.Ş., Papara is also an EMI in Turkey (a billion-dollar company) that has made it work in the home country and that too with limited venture capital of $2 million. The company has over 17 million users and an e-money license, offering a suite of services, such as money transfers and payments. The company processes an estimated 528 million transactions yearly, with a volume of $32 billion. In Turkey, it plans to become a financial super app and offers investment services as well, allowing users to buy Turkish stocks, US stocks, commodities and bonds.

Papara recently acquired Rebellion Pay in Spain and is reportedly making another acquisition in Egypt. In October last year, Ahmed Karslı, the CEO of Papara, had said that the company was actively entering into mergers and acquisitions in the European market. Like other markets, an acquisition would be a faster entry into the Pakistani market. The acquisition is useful for Pakistan considering Papara has proven it can make EMIs work. It has done that by rolling out numerous products in the Turkish market and the key to making EMIs work here would also be to roll out various products distinct for the Pakistani market.