Commercial Due Diligence for Greenergy, a UK biofuels blending business
M&A Transactions – Energy Transition
The Engagement:
Commercial Due Diligence for a UK biofuels blending and fuels supply business
The Client:
Global Commodities Trading Company
The Challenge:
Assess the UK biofuels market and provide independent due diligence and valuation support.
Duration:
2 months
How Energex helped:
Biofuels blending mapping and modelling
- Mapped the UK biofuels landscape and UK biofuels supply and demand including ethanol, FAME and biodiesel
- Assessed the production capability and therefore biofuels import (and export) requirements of the UK
- Created a biofuels blend model that gave indication of the profits for bio-blending including:
- Created a biofuels blend model that provided indications of the profits for bio-blending, including: RTFC analysis, Potential profits for bio-blending vs an assessed base case by grade
- Overall potential profits projected out to 2030 across three cases vs the target company projections
UK Fuels supply
- Energex conducted a detailed assessment of the UK road fuels supply and demand environment including:
- Market outlooks and drivers (such as vehicle fleet projections)
- Assessment of the refining outlook and assessing the ‘closure likelihood’ of UK refineries
- Projected the likely market dynamics which affected the target in the short, medium and long- term with an assessment of the overall affect on the portfolio
- Analysis of the UK fuels supply envelopes, the competitive environment and therefore the positioning of the target to supply
Assessment of the portfolio
- Conducted a red and amber flags report
- Identified the key risks and opportunities for the portfolio and their competitive advantages to supply the different envelopes
- Created a model to assess the targets volumes in both upside and downside scenario across diesel and gasoline and therefore the volumes that could be expected to 2040
Tangible Impact:
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Provided deep UK fuels and asset market context to our client through a detailed report and series of working sessions
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We produced a red flags report to identify potential concerns with the target company
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We assisted our client in understanding the value of the biofuels blending part of the business in standard and advanced biofuels context