EG Group, founded by British billionaires the Issa brothers, is on the move in Australia after over five years in the country. Sources familiar with the matter reveal that the convenience retail and petrol station operator is seeking to sell a business unit it has previously devalued twice. Talks have been ongoing with potential buyers, though reaching a satisfactory price could pose a challenge. EG originally acquired 540 petrol station sites in Australia for $1.73 billion back in 2018.
A spokesperson for the company stated that the decision to potentially exit Australia is part of EG’s broader strategy to optimise its portfolio. Founded in Blackburn, England, in 2001, EG Group has swiftly expanded under the stewardship of the Issa brothers and private equity firm TDR Capital. Presently, the group boasts over 6,000 sites across Europe, Australia, and the US and also controls the UK supermarket chain Asda.
Recent developments within EG include Zuber Issa’s planned resignation as co-CEO, leaving his older brother Mohsin at the helm. This move coincides with Zuber’s deal to purchase several sites from EG Group. Furthermore, EG has been actively restructuring to reduce its debt burden and associated costs. This includes various asset sales such as the sale-and-leaseback of US stores and divesting KFC restaurants in the UK and Ireland.
Financial challenges have been evident, with EG reporting its lowest earnings in four years. High debt expenses, coupled with rising interest rates, have impacted profitability. Exiting Australia, however, presents its own set of challenges. Notably, competitors like 7-Eleven and On The Run have already departed the Australian market, indicating a challenging landscape.
EG’s Australian business has faced setbacks, including declining fuel volumes and changes in excise duties, compounded by logistical hurdles during the pandemic. Despite initial plans for expansion, circumstances have shifted, leading EG to consider an exit from Australia as part of its strategic realignment.
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