South African businessman, Simphiwe Mehlomakulu is set to gain an ownership interest in Shell's local fuel network as Abu Dhabi's state-controlled ADNOC Distribution advances its $1 billion entry into Africa's largest industrial economy.

ADNOC Distribution has selected Mehlomakulu's Reatile Group as its local empowerment partner in the proposed acquisition of Shell Downstream South Africa.

The South African company will acquire a minority interest after the main transaction closes, expected in 2027 subject to regulatory approvals.

Neither Reatile's exact ownership percentage nor the amount it will invest has been disclosed.

ADNOC agreed in July to acquire 100% of Shell Downstream South Africa at an implied enterprise value of approximately $1 billion before adjustments for debt and working capital.

The business includes 580 company and dealer-owned service stations, 360 convenience stores, approximately 3.5 billion litres in annual fuel volumes, commercial and wholesale fuel operations, and aviation, marine-fuel and lubricants businesses.

"The partnership with Reatile Group as our local partner marks an important step in our commitment to South Africa," said Bader Saeed Al Lamki, chief executive of ADNOC Distribution. "Reatile Group has a deep understanding of the South African energy sector, its regulatory environment and operating requirements".

The stations and lubricants business will continue operating under the Shell brand through a long-term licensing agreement. ADNOC expects the acquisition to increase its earnings per share by approximately 6% in the first full year after completion.

ADNOC previously announced it would allocate a combined 28% interest to a local empowerment partner and an employee share ownership plan. Reatile has now been identified as that local corporate partner, though the company has not disclosed how the 28% would be divided between Reatile and the employee plan.

"Our partnership with ADNOC Distribution represents a significant milestone for Reatile Group and reflects the confidence placed in our 23-year track record of investing in, operating and growing energy businesses across South Africa," Mehlomakulu said. "By combining ADNOC Distribution's global expertise and financial strength with Reatile's deep local market knowledge and long-standing industry relationships, we are well positioned to support the continued growth of this strategic business".

Mehlomakulu, a chemical engineer and former employee of Sasol and PetroSA, established Reatile in 2003. The company says it has since completed more than 34 acquisitions, disposals and merger transactions, working with major banks including Standard Bank, Rand Merchant Bank, Nedbank and South Africa's Industrial Development Corporation.

The deal would make South Africa the fourth country where ADNOC Distribution operates, alongside the UAE, Egypt and Saudi Arabia. Completion remains subject to regulatory approvals and other customary closing conditions.