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KrisEngery Ltd
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Octavia
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17-Jul-2013 11:51
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The IPO is seeing hot demand internationally, with its international placement close to 6x oversubscribed by institutional investors. KrisEnergy currently owns oil and gas assets in Cambodia, Thailand, Vietnam and Indonesia. KrisEnergy counts Director of Business Development, Mr Lorentz - a geologist with more than 30 yrs of industry experience – is one of the three founders of former SGX-listed Pearl Energy that are now behind KrisEnergy. Pearl Energy had debuted at $0.70 a share in 2005 and was taken private not long after. SIAS notes the offering looks to be popular because of mgt experience, in an industry that is capital-intensive and highly risky. Also, KrisEnergy has an established track record and owns stakes in “some promising oil blocks”. KrisEnergy is offering an international placement of 132.1m shares and a public offer of 19.9 m shares including 8.9m shares reserved for employees and business associates - numbers that have been raised since it lodged its preliminary prospectus at the beginning of this month. Separately, it has placed out 94.2m shares to cornerstone investors. The offering was priced at the top of a range from $1.02 to $1.10 a share, based on a total valuation of US$650m to US$700m. At $1.10 a share, KrisEnergy is looking to raise $270.8 m from its IPO. Assuming the over-allotment option is not exercised, KrisEnergy's largest shareholder, private equity firm First Reserve Corporation, will own a 48.1% stake. Its second largest shareholder, Keppel Corp, will own 31.4%. Other cornerstone investors will own 5.1%, the founders 0.4%, and the remainder held by the public, employees and business associates. Mgt noted that the founders might seem to hold relatively few shares, but they have a lucrative share-based incentive from First Reserve as the firm exits its investment over the next few years - which it must do by 2018. This aligns their interests with shareholders to ensure share price performance. KrisEnergy will join four other companies in the oil and gas exploration and production sector listed on the SGX mainboard. They are RH Petrogas, Interra Resources, Ramba Energy and Mirach Energy. Of these, Mirach Energy has been the star performer, having surged over 6-fold from 6.5 cts in May to a high of 43 cts last Thursday. But investing in the sector comes with risks: - KrisEnergy had incurred losses for the past three years and its success depends on its ability to address business risks. - A non-alignment of interests with joint-venture partners could result in project delays, additional costs or disagreements. - Key customers are depended upon for oil and gas sales. - Reserve resource estimates could turn out to be inaccurate. More than half of its contract areas are unproven and may never be developed as the company does not have enough producing assets to cover exploration and development costs. KrisEnergy's offer closes at noon on Wednesday and trading will begin on Friday morning. |
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Octavia
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17-Jul-2013 11:48
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KrisEnergy IPO: High Risk High Returns?
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