Riverstone Holdings LLC, the private-equity firm that invests mainly in North American energy assets, will raise as much as $2.4 billion (1.5 billion pounds) through an initial public offering in London.
A new company, Riverstone Energy Ltd., will sell at least 670 million pounds in shares and already has commitments of 550 million pounds, according a statement today in London. It will make investments alongside Riverstone Holdings’s Fund 5, which has raised $7.7 billion in private equity, at a ratio of one-third to two-thirds.
“This provides public investors a chance to invest alongside private-equity investors in a way that’s both unusual and, I hope, highly rewarding,” Robert Wilson, who will serve as chairman of Riverstone Energy, said in a telephone interview. “Going to the public has been an ambition of Riverstone partners for some time to establish a permanent capital vehicle.”
The IPO gives Riverstone a source of funding that won’t need to be repaid within about five years, the time frame that most private equity funds use, Wilson said. Since Riverstone was founded by David Leuschen and Pierre Lapeyre in 2000, it has raised about $25 billion of equity and won a net overall rate of return of 20 percent.
John Browne, the former Chief Executive Officer of BP Plc and Riverstone managing director, and Jim Hackett, the former CEO of Anadarko Petroleum Corp., will sit on the board of the new company.
The five so-called cornerstone investors who have already promised to by shares are AKRC, an affiliate of the Alaska Permanent Fund Corp., KFI, a private investment vehicle of hedge fund manager Louis Bacon, Hunt Oil Co., Casita LP, and the McNair Group.
Riverstone makes buyout and growth capital investments in the exploration and production, midstream, oilfield services, power and renewable segments of the energy industry. The funds from the IPO will only be invested in exploration and production and midstream, Wilson said today.
Riverstone Energy expects to be admitted to the London Stock Exchange on Oct. 29 and will seek inclusion in the FTSE 250 index, it said in the statement.
The offering will be managed by Goldman Sachs Group Inc. and JPMorgan Cazenove.