Shell's Tongyi stake goes to Carlyle, Huo's Group


Shell's 75% holding will go to a US private equity firm.

Carlyle co-found David Rubenstein

Carlyle co-found David Rubenstein Image: Dow Jones Events

After much speculation and furtive bidding, Shell has decided to sell a 75% share of Tongyi Lubricants to Carlyle Group LP, a US asset management firm that specialises in private equity.

The deal is a rare window into China's fiercely competitive and highly regulated energy industry, wtih potential bidders for the stake including South Koreas SK Lubes and Huo's Group, Tongyi's founder.

Shell remains one of the most popular and visible high-end lubricants brands in China and the sale will provide resources to concentrate efforts around its own brand lubes.

After its enormous acquisition of BG Group for $70bn it is now looking to streamline global operations.

Carlyle will benefit from a controlling stake in a well-established producer in a growing market. Although car sales seem to be slowing across the region, the lubricants industry will likely remain robust as auto penetration increases.