July was a month of milestones for 4Refuel Canada LP.
Not only did the Langley-based firm – which provides on-site fuelling services and fuel management solutions for trucking and heavy industry companies – celebrate its 15th anniversary on July 9, its president and CEO, Jack Lee, finalized a major partnership with private equity firm TorQuest Partners Inc. four days prior to that.
“This marks one of the more significant private equity transactions [in Vancouver] since the economic downturn,” said David Lam, vice-president and director with Deloitte & Touche Corporate Finance Canada Inc.
“Jack managed to keep the momentum going on a deal that was sparked at the height of the Winter Olympics, and he structured it in a way that was good for the vendor, good for the buyer and good for the marketplace in general.”
Lam, whose firm acted as financial adviser on the deal, credits much of 4Refuel’s success to Lee, whom he calls a “classic entrepreneur with an incredible vision for the future of business.”
“Jack took a very basic type of service and had the vision to say, ‘We need to add a lot more value for our customer base than just deliver fuel to them,” Lam said. “Basically, he de-commoditized a commodity-based business through innovation and creativity. It’s the classic story of a guy putting everything on the line for the good of not only his own company, but an entire industry.”
Having grown 4Refuel from a local operation to Canada’s largest fuel-management organization since its launch in 1995, Lee is often credited with pioneering the integration of fuel-delivery and reporting systems – a concept he calls “total fuel management.”
“Before fuel, the highest cost of doing business is labour,” he told Business in Vancouver. “When you have workers taking time to top up their tanks off-site, it costs you thousands of dollars in lost labour and productivity. That’s where [on-site fuel delivery] comes in and, beyond that, the idea of a total fuel management solution.”
Total fuel management includes technology that tracks every drop of fuel a company buys and burns. Software developed by 4Refuel can collect and store detailed fuel transaction data across an entire fleet – right down to individual pieces of equipment.
“This kind of comprehensive information and consumption analysis really puts businesses back in control of their fuel costs and lets them maximize their fuel savings,” Lee said. “It puts them back in the driver’s seat.”
It also helps 4Refuel customers coast to coast reduce greenhouse gas (GHG) emissions and lessen their environmental impact through professional fuel handling, efficiency reporting and biodiesel services.
According to a calculator on the company’s website, 4Refuel has helped cut carbon emissions by over 18.7 million kilograms since April 24, 2009, and, in a recent release naming the firm’s top GHG-reducing clients in 2010 (a list that includes London Drugs, FedEx and Purolator), Lee said: “[Fuel management software] gives our clients the information they need to react to any situation where fuel is being wasted, so they can step in and pull the operating unit in for service. Without that operating and emissions data, the problem will go unnoticed, fuel is wasted for weeks, even months, and the costs to the environment grow day to day.
“Our goal is to help each of our clients minimize the cost of obtaining fuel and maximize the return on using it,” he added. “The fact that this also enables us to reduce emissions makes us even more passionate our work.”
A belief in the future of the business also seems to be the glue that helped seal 4Refuel’s latest deal with TorQuest.
“We managed to grow 20% through the recession, when most of the people in our space were down. Our concept works not only in Canada, but in Australia and New Zealand – and we know it can and will work elsewhere,” Lee said. “But if you want to be the next McDonald’s or the next Microsoft, you need to take in a financial partner who has the networks and the expertise to aid that kind of growth.”
Of the various American and Canadian firms interested in partnering with 4Refuel, TorQuest ultimately emerged – at the end of an 11-month process – as “the right fit.”
“We saw interest from Wall Street to Bay Street, but the creativity of [TorQuest’s] deal was rather unique, and just the demeanor of the people helped us make our final decision,” he said. “Not only does this allow partners like myself to monetize a little bit, it also gives us the capital we need to grow throughout the U.S. and ultimately, in a few years, take on the European market.” •