Taiyo Nippon Sanso enters Australian market with Renegade Gas acquisition

With 17 locations across Eastern Australia, Renegade Gas is a distributor of both LPG and industrial gas.

While LPG accounts for more than half of the sales of the Renegade Gas business, the company is thought to hold a share of around 10% of the cylinder market in Eastern Australia and is its main business.

Based in Ingleburn, New South Wales, Renegade Gas has around 250 employees and net sales expected to reach A$82m (¥8bn; $58m) for fiscal year 2015, ended June 2015.

Following the establishment of a new holding company – TNSC (Australia) – by the two companies, with TNSC initially putting up 85% of the capital and Renegade Gas contributing 15%, respectively, TNSC then implemented the acquisition of Renegade Gas through the new company.

Strategy

Expansion of its business into new overseas markets is part of TNSC’s strategy to increase its overseas ratio of group sales – the acquisition of Renegade Gas therefore looks to be a perfect fit.

Australian GDP is the 12^th largest in the world, while steady economic growth is expected at around 3% per year for the near future. According to The Gas Review (TGR), TNSC estimates the Australian industrial gas marketed to be valued at around ¥120bn ($1bn approx.) and expects new demand in the infrastructure and energy/resources industries in the years ahead.

Likewise, gasworld Business Intelligence’s assessement of the Australian gases business valued the market at around $1.2bn in 2014, and projects an average annual growth rate of between 2.5-5% per annum through to 2020. Mining, metallurgy, energy (LNG) and the growing services sector are among the end-user industries highlighted as driving growth through to 2020 and beyond.

TNSC expects the acquisition to lead to expansion of business in a new market, while its plans for Renegas Gas are to grow the market for medical gas and hardware, including welding related equipment which has been handled by TNSC’s Singapore-based subsidiary Leeden. The company will also eventually have its own liquid plant, TGR understands.