Dec. 7 (Bloomberg) -- Targa Resources Corp., a natural-gas pipeline company controlled by Warburg Pincus LLC, sold $360 million of shares after increasing the size of its initial public offering by 25 percent.
Targa Resources sold 16.4 million shares for $22 apiece yesterday after offering 13.8 million at $19 to $21, according to a statement and a filing with the Securities and Exchange Commission. New York-based Warburg would have received about 91 percent of the IPO’s proceeds, according to the original filing. Targa Resources gained 12 percent to $24.70 today in New York Stock Exchange trading.
The company boosted its offering by the most of any private equity-backed sale this year, after buyout firms chopped their U.S. deals by 17 percent on average, data compiled by Bloomberg show. The IPO was the first of nine scheduled this week and the second completed in December following the busiest month for U.S. IPOs in three years, the data show. The initial sale was also the first backed by a private equity firm since Harrah’s Entertainment Inc. pulled its $531 million IPO.
“This positive reception to this deal is a pleasant surprise given the recent rather desultory performance of private equity IPOs,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York.
Barclays Plc of London, Morgan Stanley in New York and Charlotte, North Carolina-based Bank of America Corp. led the offering for Houston-based Targa Resources.
Search for Yield
The company intends to pay a quarterly dividend of 25.75 cents per share, its prospectus said. On an annual basis, that would amount to 4.68 percent of its IPO price of $22 a share. The payout is more than double the dividend yield for companies in the Standard & Poor’s 500 Index, data compiled by Bloomberg show. U.S. benchmark interest rates are currently near zero.
Chesapeake Midstream Partners LP, a pipeline operator owned by the second-largest U.S. natural gas producer, Chesapeake Energy Corp., has gained 32 percent since its $513 million IPO in July. The Oklahoma City-based company has an indicated dividend yield of 3.13 percent, Bloomberg data show.
“Anything with yield in this environment attracts attention,” said Holland. “Very savvy buyers have been coming in over the last several quarters to buy properties in natural gas.”
Two of today’s three scheduled IPOs are from Chinese companies. Youku.com Inc., the online video provider whose name means “excellent and cool,” will offer 15.4 million American depositary receipts at $9 to $11 each today, its filing said.
E-Commerce China Dangdang Inc., the country’s largest online book retailer, plans to sell 17 million ADRs at $13 to $15 each after increasing the price range from $11 to $13. Both companies are based in Beijing.
CTPartners Executive Search LLC, a New York-based recruiting company, sold 2.3 million shares at $13 each, the midpoint of the forecast range, according to data compiled by Bloomberg and an SEC filing. The company will be known as CTPartners Executive Search Inc.
To contact the editor responsible for this story: Daniel Hauck at email@example.com.