Kosmos Energy Ltd., an oil and gas exploration and production company in Africa controlled by Warburg Pincus LLC and Blackstone Group LP, is planning to raise as much as $500 million in an initial public offering.
The sale will be used to fund exploration and project development in Ghana and Cameroon, Dallas-based Kosmos said in its filing with the Securities and Exchange Commission. The company didn’t say how many shares will be offered or give a price range. Kosmos intends to list the stock on the New York Stock Exchange under the ticker KOS.
More than half of the U.S. IPOs planned for this year are from private equity firms betting a rebound in equities will boost demand for some of their debt-fueled investments. New York-based Warburg and Blackstone are trying to attract buyers to a company that has generated no revenues or profits from oil or gas since its founding in 2003, the prospectus said.
“It’s a risky story because there’s no revenue,” said Nick Einhorn, an analyst at Renaissance Capital LLC, the Greenwich, Connecticut-based IPO research and investment firm. “There’s a perception that private equity firms tend to be aggressive with their pricing, and there’s a pushback against that from public investors.”
Credit Suisse Group AG of Zurich, New York-based Citigroup Inc. and Barclays Plc of London are leading the offering.
Kosmos owns exploration licenses from Ghana, Cameroon and Morocco, the prospectus said. The company has a 23 percent interest in the lease for Ghana’s Jubilee field, the largest offshore oil find in West Africa in the last decade.
The company started oil production at Jubilee at the end of November, the prospectus said. Production at the field may reach full capacity of 120,000 barrels a day by mid-2011.
Kosmos had $950 million of long-term debt as of Sept. 30, while its loss in the first nine months of 2010 more than tripled to $180 million, according to its filing. The company, which lost $417 million from its inception through Sept. 30, anticipates getting its first revenue from oil this year.
Ghana blocked an agreement in 2009 by Kosmos to sell its stake in Jubilee to Irving, Texas-based Exxon Mobil Corp. for $4 billion and later investigated Kosmos, claiming it had illegally shared information about the field with the prospective buyer.
The sale was terminated on Aug. 10, the prospectus said.
A record $1.6 trillion in leveraged buyouts were completed from 2005 to 2007, and private equity firms exited investments at a record pace last quarter as rising equity markets allowed them to sell assets and return cash to fund investors, according to Preqin Ltd., a London-based research firm.
With the Standard & Poor’s 500 Index recouping its losses from the collapse of Lehman Brothers Holdings Inc. in 2008, Barclays estimates that U.S. IPOs will raise $50 billion this year, an increase of 34 percent.