Z Energy

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Z Energy is a New Zealand fuel distributor with branded service stations. It comprises some of the former assets of Shell New Zealand. Since mid-August 2013, it has been listed on the NZX with the code ZEL. The largest shareholders are Infratil and the New Zealand Superannuation Fund, each with 20%.

Shell exited the NZ fuel distribution business in April 2010, selling its operations to Infratil and NZ Super.[1] The former Shell operations were rebranded as Z Energy in 2011. Z Energy has lost sales volumes and market share since 2011.

Market Share of Z Energy Has Fallen Since Sale By Shell

In July 2013, shares in Z Energy were offered in an IPO which was priced at $3.50 per share.[2] That IPO valued Z Energy at $1.4 billion. This value was almost four and half times the net cash outlay by Infratil and NZ Super to acquire it three years earlier.

The IPO prospectus showed that Z Energy expected to declare total dividends to shareholders equivalent to 6 cents per litre of fuel sold in 2013-14. This includes dividends to be paid to Infratil and NZ Super immediately prior to the IPO. Caltex Australia, a mature company in the same sector, has found that its lower profit margin has limited it to paying 0.5 cents to 1.0 cents in annual dividends per litre sold over the past five years.

Tim Hunter, deputy editor of the Fairfax Business Bureau, said that in completing the IPO, Infratil and NZ Super will "have pulled off a piece of exceptional business".[3]


Shell sold out of the fuel distribution market in New Zealand in 2010. The Z Energy assets and a 17% stake in listed NZ Refining were acquired by Infratil and the New Zealand Super for $891 million.[4] The exploration and production division, based in Taranaki, was not part the sale portfolio.

Z Energy competes with BP, Caltex, Mobil and several independent groups.

Z Energy supplies 210 branded service stations and commercial, aviation, marine, chemical and bitumen clients. The company also manufactures surfactant chemicals operates coastal oil tankers, tank farm terminals and owns 25% of Fly Buys and a mobile refueller.[5] The exploration and production division, based in Taranaki, was not part the sale portfolio. .[6]

A Z Energy petrol station in Petone.

Changes since the 2010 Acquisition By Infratil and the New Zealand Super[edit]

Initially, in 2010 the branding remained as Shell. After surveying 17,000 customers, the company was renamed Z Energy Limited and the service stations simply branded as Z.[7] The rebranding exercise is believed to cost around NZ$35m, compared to the NZ$10m/year cost of licensing the Shell brand.[8] The company said it would focus on better forecourt service and better food.[9]

Following the re-branding and after adding five new service stations, the market share for petrol held by Z Energy slipped from 31.6% in 2011 to 29.0% in 2013.[2]

Following the change in ownership, the firm has employed more New Zealanders in positions that were previously outsourced overseas including: IT,[10] finance and call centre services.[11]

Financials In the Leadup To the IPO in July 2010[edit]

In 2010, Infratil and New Zealand Super paid for the Z Energy acquisition and purchase of 17.1% shareholding in NZ Refining with $420 million of equity funding.[4]

At the time of the acquisition from Shell, Z Energy had an ungeared balance sheet. The balance of the acquisition cost was met by borrowings by Z Energy.[4]

The stake in NZ Refining was sold to Z Energy after the IPO for $100 million.[2] The net outlay by Infratil and New Zealand Super for 100% of Z Energy in 2010 was effectively $320 million.

Z Energy had $430 million of retail bonds at March 2013,[2] up from zero debt in 2010 when Infratil and NZ Super acquired it.

The majority of the Z Energy service stations are off-balance sheet. 152 service stations are leased by Z Energy from third parties and five are independently owned. Z Energy owns 56 service stations freehold. Z Energy sold and leased back 47 service stations in 2012-13 for cash proceeds of $87 million.[2]

Z Energy revalued upwards its remaining property plant and equipment by 54% or $170 million to a total of $481 million in April 2013.[2]

The company also paid dividends totaling $224 million to Infratil and the New Zealand Super in the three year period before the IPO, including $70 million between April 2013 and the IPO.[2]

IPO July 2013[edit]

Z Energy issued a prospectus for its non-underwritten IPO on 25 July 2013. The IPO will raised $840 million from a mixture of shares sold by the current parent and new shares issued.[2]

All of the proceeds went to Infratil and New Zealand Super, including funds raised by the issue of new shares in Z Energy Limited. Z Energy purchased the 17.1% stake in NZ Refining for $100 million from Infratil and New Zealand Super after the IPO.

Following the IPO, Z Energy has 400 million shares in total. The IPO price was $3.50. This provided a market capitalisation of $1,400 million.[2]

That market value is almost four and half times the net cash outlay of $320 million by Infratil and New Zealand Super to acquire Z Energy in 2010.

Infratil and New Zealand Super retained a combined stake of 40% in Z Energy. Z Energy is forecasting sales to fall to 2,476 million litres in 2013-14. This is 7% less than the volume in 2010-11 after addition of the five new service stations.[2]

As the basis for Prospectus forecasts, Z Energy's profit margin was expected to increase by 1.2 cents per litre in 2013-14. The Propsectus forecast a dividend of $88 million for the 2013-14 year which is equivalent to 3.5 cents per litre sold. In addition, Z Energy paid $70 million in dividends to Infratil and New Zealand Super earlier in the 2013-14 year. That is a total of 6 cents in dividends per litre in 2013-14.[2]

Caltex Australia, a mature listed company, has paid out between 0.5 cents and 1.0 cents in dividends per litre sold over the past five years.[12]


In August 2011, an advertisement by Z Energy sparked outraged through the depiction of 'New Zealand'-looking people stripping call centre equipment off 'Asian'-looking workers.[13] Mike Bennetts subsequently apologised and Z Energy released a new advertisement showing a diverse range of actors.[14]


  1. ^ http://www.webcitation.org/5z0er9EnW
  2. ^ a b c d e f g h i j k "Z Energy IPO Prospectus". Infratil. Retrieved 3 August 2013. 
  3. ^ Hunter, Tim. "Smart team behind Z offer". Fairfax NZ. Retrieved 6 August 2013. 
  4. ^ a b c Aotea Energy Limited. "Financial Statements Yr to 31 Mar 2011". NZ Companies office. Retrieved 3 August 2013. 
  5. ^ http://www.infratil.com/content/view/2783/149
  6. ^ http://www.webcitation.org/5z0etlk6x
  7. ^ Bradley, Grant (11 May 2011). "Goodbye Shell - hello Z Energy". New Zealand Herald. 
  8. ^ http://www.webcitation.org/5yb33amO5
  9. ^ http://www.webcitation.org/5yb3CuQlU
  10. ^ http://www.techday.co.nz/thechannel/news/Z-handpicks-integral-axon/16657
  11. ^ "Greenstone Energy boosts headcount". The New Zealand Herald. 17 June 2010. Retrieved 11 September 2011. 
  12. ^ "2012 Annual Report". Caltex Australia. Retrieved 3 August 2013. 
  13. ^ Pinkerton, N. (August 12, 2011). Z Energy: building its brand on shaky ground. Dominion Post. Retrieved from http://www.infometrics.co.nz/article.asp?id=5514
  14. ^ Johnson, S. (August 9, 2011). We're happy Kiwis until someone dares to be 'Asian' . NZ Herald. Retrieved from http://www.nzherald.co.nz/energy/news/article.cfm?c_id=37&objectid=10743820