RICHMOND, Va. -- In a move that signals more retail acquisitions and wholesale opportunities to come—and what type—for GPM Investments LLC, its master limited partnership, GPM Petroleum LP, has filed with the U.S. Securities and Exchange Commission to raise up to $100 million in an initial public offering.
Richmond, Va.-based GPM (No. 7 in CSP's Top 202 convenience-store ranking for 2017) founded GPMP in 2015 and it commenced operations as an MLP in January 2016. It engages in the wholesale distribution of motor fuels on a fixed fee-per-gallon basis to GPM’s more than 800 convenience stores and to third parties.
In the current SEC filing, GPMP said it intends to use the net proceeds of the IPO to make a loan of $78 million to GPM Investments in exchange for a 30-year note and to repay $13.5 million outstanding under its line of credit.
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GPMP also said that it expects “to have the opportunity to participate with GPM in acquiring convenience-store operations and related wholesale distribution businesses through directly purchasing any dealer distribution contracts or other wholesale distribution contracts and assets owned by the acquisition target, and purchasing the right to sell additional fuel volumes to GPM for convenience stores that GPM acquires or for any acquired consignment locations.”
GPMP said these opportunities will provide for growth in fuel volumes and potential rental income.
It said that of the approximately 124,000 c-stores with retail fuel sales in the United States, more than 70% are owned by entities with fewer than 50 total sites.
“As independent dealers continue to experience pressure from increased competition from nontraditional fuel suppliers, such as Wal-Mart Stores Inc., Costco Wholesale Corp. and grocery store chains, we intend to capitalize on the relationship between our wholesale business and GPM’s complementary retail business by jointly pursuing mixed asset acquisition opportunities with GPM which may not be attractive to a pure wholesaler or pure retailer,” GPMP said.
“Through GPM’s expansion, we plan to further develop our wholesale motor fuel distribution both within our existing area of operations and in new geographic areas,” it said. “We believe GPM has considerable opportunity to serve as a consolidator in our industry.”
“Strong industry relationships and proven ability to successfully complete complex acquisitions has enabled GPM to acquire assets on what it believes to be attractive terms,” GPMP also said. “GPM has successfully integrated its acquisitions into its existing business by realizing economies of scale through increased purchasing power with refiners and other fuel suppliers. The convenience-store industry is fragmented, which we believe presents acquisition opportunities for GPM and us. GPM continues to evaluate a number of acquisition opportunities.”
GPMP did not disclose pricing terms of the IPO, but said it intends to apply to list its common units on the New York Stock Exchange (NYSE) under the symbol “GPMP.” It originally filed for but withdrew an IPO in April 2015.
Raymond James, Wells Fargo Securities and RBC Capital Markets are the underwriters for this transaction.
GPM Investments controls a portfolio of 805 c-stores under a variety of names including Fas Mart, Shore Stop, Scotchman, Admiral, BreadBox, Young’s, Li’l Cricket, Next Door Store, Village Pantry, Apple Market and Jiffi Stop. It is the exclusive motor fuel supplier to an additional 132 dealer sites throughout 18 states in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States.