QR Energy’s $300 Million IPO Caps Week of Nine U.S. Offerings
QR Energy LP (QRE), the Houston-based company formed to acquire oil and gas properties, raised $300 million in its U.S. initial public offering after selling shares at the middle of its forecast range.
QR Energy sold 15 million units at $20 each yesterday after offering them at $19 to $21 apiece, data compiled by Bloomberg show. Fortegra Financial Corp. (FRF) also completed its $66 million sale after chopping the IPO 46 percent, while Ventrus Biosciences Inc. raised $17.4 million.
Nine companies completed U.S. IPOs this week, the most in almost two months, data compiled by Bloomberg show. QR Energy’s sale comes after Targa Resources Corp. (TRGP) and Chesapeake Midstream Partners LP gained more than 20 percent since their IPOs this year, according to Bloomberg data.
The performance of energy-related IPOs has “been quite positive, and I think that’s helping this deal as well,” said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees $3 billion.
Wells Fargo & Co. (WFC) of San Francisco, New York-based JPMorgan Chase & Co., Raymond James Financial Inc. of St. Petersburg, Florida, and Toronto-based Royal Bank of Canada led the offering for QR Energy. The company will use the proceeds from the IPO and borrowings from a credit facility to make a cash payment to QR Energy’s existing owners and repay debt, its prospectus said.
QR Energy intends to pay an annual dividend of $1.65 per share, according to its SEC filing. That would amount to 8.25 percent of its IPO price of $20 a share. The payout is about quadruple the dividend yield for companies in the Standard & Poor’s 500 Index (SPX), data compiled by Bloomberg show. U.S. benchmark interest rates are currently near zero.
Targa Resources, a natural-gas pipeline company that was controlled by Warburg Pincus LLC, has advanced 24 percent since its $360 million initial offering this month. The Houston-based company has an indicated dividend yield of 3.52 percent, data compiled by Bloomberg show.
Chesapeake Midstream, a pipeline operator owned by the second-largest U.S. natural gas producer, Chesapeake Energy Corp., has gained 27 percent since its $513 million IPO in July. The Oklahoma City-based company has an indicated dividend yield of 5.12 percent, according to Bloomberg data.
“It’s a yield play,” said IPOX Capital’s Schuster. “That’s a different ballgame than a traditional IPO.”
Fortegra, the Jacksonville, Florida-based insurance services company, priced 6 million shares at $11 each yesterday after failing to complete a 7.7 million offering at $14 to $16 apiece, Bloomberg data show.
Ventrus (VTUS) of New York sold 2.9 million shares for $6 each after offering 2.8 million at $6 to $7 apiece, its SEC filing and data compiled by Bloomberg show. The company intends to use the proceeds to conduct clinical trials, develop drugs and repay debt, the prospectus said.
A total of 192 companies have sold $47.8 billion of shares in U.S. initial offerings this year, more than double the $20.2 billion raised in 2009, according to data compiled by Bloomberg that excludes sales from over-allotment options.
The amount is the highest since $87.6 billion in IPOs were completed in 2007, when the Standard & Poor’s 500 Index, the benchmark gauge of American equity, climbed to an all-time high. Take away Detroit-based General Motors Co.’s (GM) sale of common shares last month and the 2010 total decreases to $32 billion.
Swift Transportation Co. (SWFT) of Phoenix completed the second-largest U.S. IPO of the year behind GM this week, selling $806 million of shares. The biggest truckload carrier in North America raised about 20 percent less than originally sought.
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