Trafigura paid a retired Angolan general $390m for shares in an international fuel supplier it controls, in a deal whose terms provide a glimpse into the costs of unwinding one of the Swiss commodity trader’s most lucrative yet controversial relationships.
The transaction in June last year was part of an effort by Trafigura to restructure its business in Angola and to attract more lenders to the debt-laden Puma Energy by reducing the shareholding controlled by Leopoldino Fragoso do Nascimento — widely known as “General Dino” — from 15 per cent to about 5 per cent.
Dino was a military adviser to Angola’s former president José Eduardo dos Santos and one of the most powerful businessmen in the southern African oil-producing nation during the final decade of the leader’s 38-year rule.
Under dos Santos, partnerships with Dino’s Cochan Holdings LLC helped Trafigura dominate the supply of petroleum products in Angola, generating bumper profits that supported the Swiss group’s transformation from a scrappy trader into a global commodity giant.
Then in 2017 dos Santos handed power to João Lourenço, who has since accused the former president of presiding over decades of corruption and set about reclaiming assets from dos Santos’s allies and retendering contracts. Dino was named by Angolan prosecutors last October as a formal suspect in alleged historic graft involving several high-profile Chinese companies.
Trafigura announced the planned reduction in Dino’s shareholding in March 2020 but did not disclose the terms of the deal at the time.
According to Puma’s 2020 annual report, Malta-registered Trafigura PE Holding Limited paid Dino’s Cochan $390m in June 2020 for just under 12m shares, equivalent to approximately $33 a share. The transaction meant Cochan, which then controlled 5.04% of the company, “ceased to be a significant shareholder”, Puma said.
For almost a decade, Dino had helped Trafigura maintain a near monopoly on the supply of petroleum products into Angola via DT Group, a joint venture formed in 2009 by Trafigura and Cochan. Once inside the country, those products were distributed to business and retail customers through Puma’s network of service stations, airport terminals and marine terminals.
Trafigura first invested in Puma, which now has more than 7,000 employees in 45 countries, in 1997. Cochan invested in several of Puma’s African operations between 2008 and 2010, according to Puma filings, before converting those shares into an 18.75 per cent stake in Puma in 2010 that was later diluted to 15 per cent. In 2011, Angola’s national oil company Sonangol also acquired a stake in Puma, while Dino sat on Puma’s global board from 2013 to 2020.
Dino’s Puma shareholding and board seat was testament to the value of Angola to Trafigura, said Ricardo Soares de Oliveira, a professor at Oxford university who has studied the role of commodity traders in Angola. “Dino wasn’t just a local middleman. He, or the Angolan interests he represented, had become extremely important.”
He added that after Lourenço took power it appeared Dino’s close association with the dos Santos regime had left Trafigura with no choice but to dilute his role if they wanted to have any future in the country.
Shortly after the leadership change, Sonangol retendered contracts for the supply of refined petroleum products into Angola, cutting out Trafigura and awarding deals to provide gasoline to Total and diesel and marine diesel to Glencore.
In a further sign of Trafigura’s changed position in the county, the Swiss trader announced in April that it would in effect withdraw from the fuel distribution business in Angola by acquiring Sonangol’s 32 per cent stake in Puma for $600m before selling the fuel supplier’s Angolan assets back to Sonangol for the same price.
That transaction valued Puma stock at $20 a share, while a second shareholder transaction in June 2020 valued it at about $19, public records show.
Trafigura directed questions to Puma. Puma said the company was “comfortable it had paid the right amount” for Cochan’s stake in the business, and that “the valuation used was pre Covid-19 and was consistent with the value of Trafigura’s then 49.3 per cent stake in Puma Energy”.
In its 2019 annual report Trafigura had reduced the value of its own stake in Puma to $1.75bn, valuing the fuel supplier at almost $3.6bn.
Dino could not be reached for comment.
“In order to stay in Angola, even in a much diminished role, Trafigura needed to move on beyond the dos Santos era partnerships,” Oliveira said.
Additional reporting by Neil Hume