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Darby Overseas Exits Alesat Combustíveis S.A. with Sale to Ipiranga for US$610m

13 June 2016

(Press Release) Darby Private Equity announced that its Latin America fund sold its stake in Brazil-based Alesat Combustíveis to Ipiranga Produtos de Petróleo for R$2.1b (US$610m).

Darby Private Equity (“Darby”), the dedicated private equity arm of Franklin Templeton Investments, announced that the Darby Latin America Private Equity Fund (the “Fund” or “DLAPE”) has completed a transaction to sell its indirect ownership interest in Alesat Combustíveis S.A. (the “Company” or “ALE”) to Ipiranga Produtos de Petróleo S.A (“Ipiranga”) a subsidiary of Ultrapar Participações S.A. (“Ultrapar”). The enterprise value of the 100% sale of ALE to Ipiranga is R$2.1b (US$610 m).

Based in Belo Horizonte, ALE is a distributor of fuel with 20 years of history. Darby first invested in Satélite Distribuidora de Petróleo S.A. (“SAT”) in 2004, and helped it grow and merge with ALE to create an important player in Brazil’s fuel distribution industry. ALE distributes fuels through a network of approximately 2,000 gasoline stations and 270 convenience stores. In 2015, ALE sold 4.3m cubic meters of diesel, gasoline, ethanol and CNG. For the same period ALE recorded revenue of R$11.4b (US$3.3b) and EBITDA R$275m (US$80m).

Ipiranga has a network of more than 7,200 service stations throughout Brazil, aimed to provide a complete experience to their consumers, from fuels and lubricants to more innovative products. Through its strategy of differentiation, based on a wide range of products and services, Ipiranga has the largest loyalty program of Brazil, Km de Vantagens, with more than 21 million participants.

ALE’s network complements the Ipiranga network geographically, especially in the North and Northeast of Brazil, where Ipiranga has less market share. Ipiranga intends to extend its strategy of differentiation to the ALE network. The combination of the two companies provides greater efficiency and competitiveness, with benefits for both consumers and resellers.

“Ultrapar, operating through its subsidiary Ipiranga, is an excellent company that has an attractive market position. We are very glad with the completion of this transaction and we believe the combination of ALE and Ipiranga will strengthen both companies and benefit shareholders, employees, consumers and business partners. We are very pleased to have enjoyed a long and successful relationship with SAT and subsequently with ALE,” said Mr. Richard Frank, President and Chief Executive Officer of Darby Private Equity.

Completion of the deal is subject to certain customary conditions precedent, including the approval by CADE (Administrative Council of Economic Defense) entity that will examine antitrust issues. The companies will keep their operations separate until conditions precedents are met and regulatory approvals obtained.