LNG exporter Venture Global cuts target valuation for US IPO to $65.3 bln
Jan 22 (Reuters) - LNG exporter Venture Global on Wednesday slashed the valuation it was seeking from its U.S. initial public offering to as much as $65.33 billion, significantly lower than the more than $100 billion it had initially aimed for.
The company also lowered its offer price, effectively increasing the number of shares on sale against the backdrop of analysts warning that its high target valuation and small float could deter potential investors.
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It now aims to sell 70 million shares at a price range of $23 to $27 to raise $1.89 billion, compared with its prior target of selling 50 million shares for $40 to $46 each to raise as much as $2.30 billion.
"Offering more shares at a lower price would imply it needs to raise a specific amount of money at the IPO, yet the prospectus says there is no specific plan on how and where it will apply new funds," said Dan Coatsworth, investment analyst at AJ Bell.
"It's unusual for a company to increase the number of shares it plans to issue at IPO."
The pricing of an IPO is not guaranteed to fall within the range provided at the start of the formal marketing process and making adjustments is relatively common. The final price is often dictated by investor demand, underwriters and the company.
Venture Global's share sale coincides with Trump issuing an order to resume processing export permit applications for new LNG projects, in a push to raise U.S. energy output and dismantle his predecessor's climate policies.
His decision could pave the way for almost 100 million metric tons per annum of additional LNG by 2031 by projects that are significantly advanced, further cementing the U.S. as the world's largest LNG exporter.
The order reversed a pause on permits for new projects that put in place in early 2024 to study the environmental and economic effects of the booming export industry.
Reuters first reported the revised IPO plans on Tuesday, citing a source.
Venture Global exports LNG through a process in which gas is cooled into a liquid form for transportation to several international markets, including Europe and Asia.
"Building export terminals is expensive and Venture Global joining the stock market will allow it to tap capital markets for funding," Coatsworth said.
Global LNG demand has been rising as the world transitions to cleaner energy sources.
The U.S., a key supplier to European and Asian countries, has become the largest exporter of the superchilled gas, driven by abundant natural gas reserves and the rapid development of LNG terminals along the Gulf Coast.
Venture Global has five LNG projects in various stages of development near the Gulf of Mexico in Louisiana and expects to have total peak production of 143.8 million tonnes a year.
The company, founded in 2013 by former investment banker Michael Sabel and financial lawyer Robert Pender, is aiming to trade on the New York Stock Exchange under the ticker symbol "VG."
Its IPO is being underwritten by a syndicate of Wall Street banks led by Goldman Sachs, J.P. Morgan and BofA Securities.
(Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)