LNG exporter Venture Global cuts US IPO estimate to $65.3 billion, Reuters
By Manya Sani and David French
(Reuters) – Venture Global LNG on Wednesday lowered the price it is seeking from a U.S. initial public offering to $65.33 billion, significantly less than the $110 billion originally planned.
The second-biggest exporter in the United States was revised following a trading day for investors that showed the company’s high pre-estimated price.
The investor is concerned that the company’s future sales will not justify its assumption that the opportunity to buy equity in a pure-play US LNG exporter is worth more.
It is the first major IPO of President Donald Trump’s second term and is expected to be part of the incoming administration’s agenda to boost energy production.
Trump signed an executive order on the first day to end the new ban on LNG export permits that has hampered Venture Global’s expansion plans. He said he would like to see European companies buy more US LNG.
The revised IPO plan – first reported by Reuters on Tuesday – will offer more shares to bridge some of the gaps in fundraising from a lower valuation.
The venture had planned to sell 70 million shares at prices ranging from $23 to $27 to raise $1.89 billion, and had previously sold 50 million shares at prices ranging from $40 to $46 to raise up to $2.3 billion each.
Dan Coatworth, an investment analyst at AJ Bell, said: “Offering more shares at a lower price indicates that there is a need to raise some amount of money in an IPO. matter
The IPO price is not guaranteed to fall within the range given at the start of the normal trading process and adjustments are normal. The final price is usually dictated by the interest of investors, underwriters and the company.
Despite the price revision, Venture Global’s potential market capitalization could exceed that of rival Cheniere Energy (NYSE: ) , currently the largest U.S. LNG exporter at about $56 billion.
The $65-billion valuation makes it the top 10 U.S. energy name by market value, along with North American energy companies including Occidental Petroleum (NYSE: ), Marathon Petroleum (NYSE: ) and Schlumberger (NYSE: ).
Tail Winds
Venture Global exports LNG through a process that enables the gas to be transported in liquid form to various international markets, including Europe and Asia.
As the world transitions from coal to cleaner energy sources, global demand for LNG is increasing. Because of the shale boom that has transformed the nation’s energy sector, the US is producing large amounts of natural gas.
Developers such as Venture Global have built terminals along the US Gulf Coast to liquefy and transport the gas, making the United States the world’s top LNG exporter.
U.S. supplies have helped fill a gap in Europe’s gas supply after the European Union imposed sanctions on most Russian gas imports during Russia’s invasion of Ukraine.
While there are no additional projects that could move forward if the U.S. receives new export licenses, the U.S. is on track to increase LNG capacity to more than 200 million tons per year.
Venture Global has five LNG projects in various stages of development in Louisiana near the Gulf of Mexico, with an expected peak production of 143.8 million tons per year.
In the year Founded in 2013 by former investment banker Michael Sabel and financial attorney Robert Pender, the company plans to trade on the New York Stock Exchange under the symbol “VG.”
Its IPO is being underwritten by a syndicate of Wall Street banks led by Goldman Sachs, JPMorgan and BofA Securities.