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Venture Global, one of the biggest US liquefied natural gas exporters, has dramatically scaled back its IPO plans, dealing a blow to Wall Street’s hopes for a rebound in equity capital markets activity this year.
The company said on Wednesday it was now seeking a valuation about 40 per cent less than the $110bn it targeted earlier this month, as investors balked at a listing price set higher than many of Venture Global’s competitors. The relatively small amount of equity initially offered for sale by the company founders was also an issue for investors, according to one hedge fund investor who specialises in the energy sector.
“While the growth story for Venture Global is compelling and differentiated, investors pushed back on the near 20 times enterprise value to earnings multiple while its lower growth peer Cheniere trades at 12 times,” said Michael Alfaro, chief investment officer of hedge fund Gallo Partners.
“The revised range substantially closes that gap putting Venture Global closer to 13 times, while still maintaining robust multiyear growth,” he said.
Venture Global said it would now sell 70mn shares for up to $27 each, according to a securities filing on Wednesday, compared with its plan in a January 13 filing to sell 50mn shares for up to $46 each.
At the high end of its new share price range, Venture Global would raise almost $1.9bn, down from its previous goal of $2.3bn, which would have been one of the largest energy sector listings in more than a decade.
The decision to slash the marketed range for Venture Global’s IPO is a setback for the three big Wall Street banks leading the deal, Goldman Sachs, JPMorgan Chase and Bank of America.
Venture Global did not immediately respond to a request for comment.
The change in float price and the number of shares being offered for sale would leave the company valued up to about $65bn — a far cry from the $110bn valuation initially sought, which would have ranked Venture Global higher than oil major BP with a market capitalisation of $85bn.
Andrew Gillick, a managing director at energy consultancy Enverus, said the initial pricing was aspirational, giving credit to projects that were a decade from coming on line while the new valuation is more realistic, banking on near-term opportunities.
At $23 a share — the new low end of Venture Global’s IPO price range — the company would be valued at about $56bn, on par with Cheniere Energy, the largest LNG producer and exporter in the US.
Venture Global’s proposed float comes as LNG developers are poised to be one of the top beneficiaries in the second term of US President Donald Trump, who on Monday ordered the end of a Biden-era moratorium on licensing for LNG terminals.
This story has been amended to correct the share count offered in the IPO
https://www.ft.com/content/fb06e65c-50c8-4e07-a52e-79c9b4ff102d
