GasLog Ltd., the liquefied natural gas shipping company based in Monte Carlo, Monaco, fell 11 percent on its first day of trading, after pricing its U.S. initial public offering below the marketed range.
The shares dropped to $12.41 at the close in New York. The company sold 23.5 million shares for $14 each to raise $329 million, according to a statement today. Gaslog, based in Monte Carlo, Monaco, had earlier offered them for $16 to $18 apiece.
GasLog, which owns and operates a fleet of ships that transport LNG, completed its IPO after hiring costs for vessels set a record. Large, modern LNG carriers will earn $147,000 a day on average this year, according to the median of six analysts surveyed by Bloomberg as of last week. An additional 100 LNG carriers will be needed by 2016, as liquefaction capacity expands 38 percent, according to GasLog’s prospectus.
An increase in orders for LNG carriers raises the risk that daily rates for the vessels will decline, according to ICAP Shipping International Ltd. Contracts to build 50 of the tankers were signed at shipyards in 2011, compared with 12 a year earlier, Simon Newman, head of tanker research at the London-based shipbroker, said last week at a conference in Stamford, Connecticut.
‘Same Side of Boat’
“If we’re not careful, everybody’s going to jump to the same side of the boat and it’s going to sink,” he said. “It’s getting a little bit risky.”
The shares are listed on the New York Stock Exchange under the symbol GLOG. The midpoint of the IPO range valued GasLog at $1.07 billion, or 16 times last year’s sales. That compares with an average of 2.3 for a basket of marine transportation peers, according to Bloomberg data. LNG shipper Golar LNG Ltd. is valued at 9.7 times sales, while oil and petroleum transporter Teekay Corp. trades at 1.2 times sales.
Revenue at GasLog surged 67 percent to $66.5 million last year, while costs almost doubled, regulatory filings show. Net income increased 43 percent to $13.7 million. The company plans to use proceeds from the sale to fund the construction of eight new carriers and for general corporate purposes. Four of the ships have been chartered to exploration company BG Group Plc and two to Royal Dutch Shell Plc.
Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and UBS AG managed the offering. Chief Executive Officer Peter Livanos will remain the company’s biggest shareholder after the IPO, the prospectus shows.